Sector Relative Strength Report - November 16, 2020

Click on image to download the PDF.

Our charts are beginning to reveal a great deal more information than we've seen in the past few weeks.

The relative strength of both Mid- and Small Caps (see exhibit 2 in the pdf) have been gaining on the S&P 500 since late October and are poised to outperform, suggesting investors' appetite for recent gains are unabated. Risk tolerance is clearly speculative, but this can persist for some time.

The peak relative strength of leading cyclical sectors (except for Financials) continues to regress lower, while defensive sectors RS readings have begun to ease higher. (Consumer Discretionary vs Staples is illustrative). Internal rotation within sectors continues as well. Stay on the side of strength with heightened risk management.