Stock Market Update: Sector Rotation Accelerates

The broad markets remain at elevated levels as rotation begins to accelerate out of some recent high flyer sectors. The Financials Sector (NYSEARCA:XLF) and Healthcare Sector (NYSEARCA:XLV) have been stellar performers since about early December of last year. Financials perhaps a bit earlier coinciding with the Presidential election.

Both of these sectors are beginning to roll over and that has kept the broad market S&P 500 (NYSEARCA:SPY) spinning its gears and looking vulnerable.

I mentioned in the last couple of updates that the S&P 500 had reached 2 standard deviations above its 13 month MA which is indeed thin air territory. Perhaps yesterday’s sell-off is the start of a pullback…

We have backed away from it a bit and I still am of the opinion that the highs are in for this month.

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An early recipient of inflows in this latest rotation appears to be the unloved energy sector, particularly large integrated companies such as Exxon Mobil (NYSE:XOM) and Schlumberger (NYSE:SLB). Again this is very early in the rotation and caution should still apply but I am building positions in the following:

Again these are starter positions on a sector I think will do well in the next couple of months.


Sector Rotation

Rotation is the lifeblood of the bull market. I wanted to put out a few sector charts to highlight how some sectors are looking today.

Thanks for reading and trade safe!


Twitter:  @CJMendes

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.