As the market continues its slow but steady march further into overbought territory, Sabrient's SectorCast-ETF rankings are holding steady. Energy, Healthcare and Financials still look undervalued, while Telecom, Industrials, and Materials look overvalued.
At year end, SectorCast was flashing warning signals about the market getting ahead of itself, and soon thereafter the market corrected. Then the model showed indications that the market wanted to breakout to the upside, which it has. Now, SectorCast seems to be reflecting the uncertainty among analysts by appearing to give a more neutral stance on near-term market direction.
With the S&P 500 sitting at a decision point around 1150, we'll have to wait and see which way it decides to go. Consumer Discretionary has stalled its upward climb in our rankings, and InfoTech has stabilized its fall – both stopping in the middle of the. So, these two economically-sensitive sectors are not providing much in the way of clues regarding market direction.
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Latest rankings: This week, the top and bottom sectors in SectorCast-ETF remain the same as last week. Energy (XLE) holds on to the top spot with a score of 76. Healthcare (XLV) continues in second place with a 71, again followed by Financials.
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XLE boasts the top score in projected year-over-year change in earnings across the sector and also shows the best (lowest) projected price/earnings ratio. It also scores highly in the percentage of analysts' positive revisions to earnings estimates.
XLV ranks second in return on equity and third in projected P/E, but in general it achieves its overall ranking by simply scoring reasonably well across all of the relevant factors in the model.
Top-ranked stocks within XLE and XLV include Murphy Oil (NYSE: MUR), ConocoPhillips (NYSE: COP), Bristol-Meyers Squibb (NYSE: BMY), and Coventry Health Care (NYSE: CVH).
At the bottom of the rankings, we again find Telecommunications (IYZ) and Industrials (XLI). IYZ came in with a low score of 35, while XLI remains in the ninth spot with a score of 44. IYZ received even more analyst downgrades to earnings estimates during the week, is the worst in across the sector, and is near the bottom in return on equity. XLI still sports the worst (highest) projected P/E and the second-to-the-worst projected year-over-year change in earnings.
Low-ranked stocks within XLI and IYZ include C.H.