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May 10, 2005
Sector Rotations
In addition to low volume and hesitation on the breakouts, recent sector rotations reflect a low appetite for risk. Information Technology is underperforming and showing relative weakness, while HealthCare is outperforming and showing relative strength. This is not a bullish combination. Strength in HealthCare will benefit the S&P 500 somewhat, but weakness in Information Technology will offset this strength.
HealthCare remains the most favored sector and shows excellent relative strength. The index formed a higher low in March and moved to new highs in early May. Money is clearly moving out of cyclical groups and into non-cyclical groups like HealthCare and Consumer Staples.
Posted by Arthur B. Hill at May 10, 2005 03:59 PM