Sector Performance: Just Buy The S&P 500 And Forget About It

August 07, 2012 10:27 AM

(By Rich Bieglmeier) It's going to be hard for money managers and individual investors alike to outrun the S&P in the days, and perhaps weeks ahead. In all the years I have been analyzing sector charts relative to the S&P 500, it's hard to recall another quite like this week's.

Chart after chart after chart, sort of a technical analysis groundhog, twilight zone day, showed industries and sectors on pause as the index charged on by them. The only hiding place with a clear advantage is anything telecom; although, many of the oil & gas charts that made last week's bull lists might just be resting before the next run.

Next week, iStock suspects we could see oil and gas return to the buy columns and might be joined by a few new entrants that appear to be at the ready, set position. Technology and a few sub-tech industries have their feet in the blocks, fingers on the line, and are coiled waiting for the snap of the starter's go pistol. Hopefully, by the time we meet next week for this column, the smell of blanks will be in the air.

Fortunately, the number of bear entrants does not stretch beyond the usual number of entrants. However, the one thing iStock did notice is that many, which met our underperformance criteria, almost went vertically. Most of the time, bear sectors and industries sort of drift lower, like a descending airplane. Occasionally, the emerging bears and bulls fall like a toboggan down a bumpy slope, but this week, quite a few look like parachuters before they pull the string – straight down, relative to the S&P, of course.

In a way, especially in a market that is rising, this scenario makes it easy, buy a S&P exchange traded fund like SPDR S&P 500 (SPY) and forget about it until fresh leaders show their faces. iStock will, however, do like we do every week and examine the six bullish sectors to see which companies stand out as potential buy candidates.

Here is this week's sector performance review:

EMERGING BULL: Industries with positive technical analysis traits that are in the early stages, indicating possible above average returns in the near-term:

Internet

Heavy Construction

Life Insurance

MATURE BULL: Industries that have outperformed and their charts suggest the above average returns could continue:

Fixed Telecom

Telecom

Mobile Telecom

MATURE BEAR: Industries that have underperformed and, based on their current chart patterns, could continue to lag:

Aerospace

Delivery Services

Travel & Leisure

Food & Drug