Sector Analysis: December 2021
The year is almost over, and this will be the final sector analysis for 2021. The sector analysis is one of the important assessments to tell me the real health of the markets. Here is the summary of how it looks like:
It looks very good when viewed through the full year. All the sectors I track returned double digit gains except for the Biotech sector that fared bad throughout the year. The ones highlighted green are all currently trending bullish per my model.
The top 5 sectors for 2021 year-to-date are:
XLE - Energy
XLB - Homebuilders
XRT - Retail
XSD - Semiconductors
XLRE - Real Estate
However, per my model, these are not the best sectors to invest in right now. In fact, XRT Retail is the worst sector and XSD Semiconductors is also trending bearish.
Interestingly, the top 5 sectors by their returns in the trailing 1-month period are:
XLU - Utilities
XLV - Healthcare
XLRE - Real Estate
XLK - Technology
XLB - Homebuilders
These are the ones I am bullish about right now and will look to invest at appropriate times. As we can see XLB Homebuilders is the only one common between the 2 lists of best performing for 2021 and trending bullish right now.
The S&P 500 overall has turned bullish recently. It is up +25.43% year-to-date. That would place it at 10th spot in comparison to its sectors. So, I like to review the sectors that are better performing than others.
Many of the sectors are cyclical in nature and it helps to look at each of their correlation with the S&P 500 overall market index. That will be an assessment for another day.