Thursday, November 27, 2008

Thanksgiving Rally Sector Review

As of Thanksgiving, the S&P500 has rallied 19.8% in the three and a half days since last Friday's bear market lows. The powerful move has left 9 out of 12 major sectors overbought in the very short-term by several technical measures. Possibility of a pending pause or immediate pullback aside, that's not to say there still isn't room to run higher through the end of the year: intermediate-indications remain neutral, debt markets are finally responding to government efforts, and we have entered the traditionally bullish post-Thanksgiving to Christmas season for equities.

The graphs and tables excerpted below from the pending Daily ETF Rewind provide insight into the relative performance of the sectors during the rally, as represented by selected tracking ETFs. Although the weakest sectors for the year, namely Financials (XLF) and Real Estate (IYR), put in the best recovery performances, they still lag the market badly longer-term. The reverse can be said of the recession trade winners, including Consumer Staples (XLP), Healthcare (XLV) and Utilities (XLU).

In the days and weeks ahead, I will focus on emerging shifts in leadership. I hope you had an enjoyable Thanksgiving.

Reading: Traderfeed's Sector Take

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