The current market continues to strongly favor certain sectors over the others. According to the recent comparative performance, the following four sectors continue to show relative strength: 1) finance, 2) retail, 3) energy and 4) consumer discretionary. On the other hand, the biotech sector is a clear laggard, which has been under continuous distribution as of late.
Sectors: Relatively Performance, Last 90 days
The finance sector has been especially hot during the last several months. The monthly chart of the finance sector ETF — XLF — shows a truly monumental break out above the multi-decade resistance level.
As long as finance, energy, retail and consumer discretionary sectors continue to show relative strength, any general market pullback will be shallow and will be contained within the -5% range.