David Versus Goliath: An abundance of chatter has been made about the consolidation within the small-cap arena. On a very general basis, the IWM has gone virtually sideways since February. In the consumer discretionary arena, there is some divergence occurring in regards to the larger cap, more top-heavy, XLY to the "smaller cap", more equal weight XRT. While the XLY is right at all-time highs and on a very impressive 4 week winning streak, the XRT trades 5% off its 2021 peak, and this week the difference was glaring with the XLY higher by 4.3%, and the XRT falling fractionally. TSLA, on a current 10 week winning streak, recently joined the exclusive trillion market dollar cap club (just 5 others including MSFT GOOGL AMZN AAPL and Aramco) by jumping 22.5% this week, it's second-best WEEKLY gain behind the 24.7% gain the week ending 1/5. Expect the psychological very round 1000 figure to be supportive going forward, if retested. AMZN recorded a 100 handle reversal intraday to CLOSE at highs for the session Friday after an ill-received earnings release. While the two aforementioned names dictate the vast majority of the action in the XLY do not discount how HD is doing, falling just 4 sessions in all of October. NKE and TGT, other top 10 holdings are quickly building the right side of their cup bases. The latter completed a handle Friday. Advantage large caps.
Relative Performance: Not surprising to see weakness on ratio chart against S&P 500 for the staples. It is the "worst" actor among the 11 major S&P sector groups up just better than 7%. The XLP is now 4% off most recent 52 week highs, and top component in PG could have ETF feeling heavy as chart is sporting bearish top pattern.
Relative Strength: XLU is the 10th best of 11 major S&P sectors on a YTD basis having advanced almost 10% YTD. The current 3-week winning streak has gained by a tepid 5.2%. Last week's 2.4% advance was the second-best WEEKLY gain in last 6 months. Has made back just more than half of the strong 4 week sell-off the weeks ending 9/10-10/1, many in above-average WEEKLY volume.
Relative Performance: Ratio chart below compared to S&P 500 makes it look like healthcare is having a tough year. Just the opposite with XLV higher by more than 17%, but that makes it just the ninth-best major S&P sector actor of 11. Not helping is that the XLV is just the 10th best of 11 on a one and three-month lookback period, basically UNCH during the time frame.
Relative Performance: Group has seen some real bifurcating action this year. Of course, gold and gold miners have been a big weight on the overall materials space as the only 2 subsectors within negative on the year. On the other hand, aluminum and steel, and chemicals have been a tailwind for the group. On ratio chart below one can see the failed rally attempts last 6 months.
Relative Performance: Group which has been on a slippery, steady downtrend between June-September has recorded a potentially good looking bullish reversal. Over that last week, the transports have really led the charge and that could be saying an economy on the mend. The truckers,, railroads and delivery services all have done most of the heavy recent lifting. UPS looking attractive, back above 200 number, just 7% off most recent 52 week highs while FDX is 27% off its own, not a typo.