Sector and Popular ETF rotation deep dive

This morning, I take a look at the latest 5 week rotation of the SPDR sectors along with a number of popular tracking ETF’s for various segments of the market.

Purpose and Usefulness of the Rotation Studies
In my world view, the direction of the broad market dictates roughly 60% of a stocks expected move, the sector dictates 20-25%, and the specific stock dictates around 15%.
If you can focus your bullish stock selections in leading and improving sectors, I think your odds are much improved in finding winners.

5 week SPDR Sector Rotation
The graph shows the path of each sector over the past 5 weeks relative to the benchmark of the SPX. You can also easily see the relationship between the sectors to each other.

The table below shows the absolute performance of each sector.

Popular ETF 5 week Rotation Study
I took a number of popular ETF’s across industries to see what their recent rotation looked like.  Some interesting findings.  Again, the benchmark was SPX

Summary
Biotech ETF’s IBB / XBI make bold moves into the leading quadrant.  Retail ETF XRT looks strong.  IYR maintains its strength while Semiconductor ETF SMH makes a small improvement.

Homebuilder ETF’s XHB and ITB make slight improvements.

Oil services ETF OIH falls hard from a leading position. Banks, Gold, Gold miners, metals & Mining, and EEM weakened over the study period.

I hope these rotation studies give you some added insight to how markets are behaving and give you solid clues on where to hunt for good prospects.

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