Defensive Posture Bifurcation:
There is no competition for energy YTD with the XLE up more than 60%, but vying for the runner-up position in 2nd and 3rd are the utilities and staples. The XLU is UNCH in 2022 thus far and the XLP has declined by 6.3%. I have drawn a few ratio charts comparing the “defensive” spaces against the S&P 500 including the XLRE. Keep in mind just because one looks better than the other on a relative basis, on an absolute basis they can both underperform. So take each individual name within the group on its own merit. It can give good information to drill down into the better subsectors inside for potential longs and vice versa for the shorts. What did catch my eye is the weakness in real estate, via the XLRE. The ETF is lower by 20% YTD and is just the eight best of the 11 major S&P sectors. Between Wednesday-Friday last week the fund lost more than 7%. In the chart below regarding the staples if one was to drill down they would see tobacco names are an area to closely watch.