Sectors Beating the Market In 2012 – Current Sector Trends and Where To From Here

In the first eleven months of 2012, the stock market performance, as indicated by the S&P 500 Index, did reasonably well. From its opening price on January 3rd 2012 through the closing price on November 30th, the SPX rose by 12.14%.

Four sectors beat the market in the first eleven months of 2012. The four sectors had increases ranging from 12.8% to 19% during that period of time.

  1. Consumer Discretionary Sector (XLY) 19.03%
  2. Financial Sector (XLF) 18.22%
  3. Healthcare Sector (XLV) 14.16%
  4. Transportation (XTN) 12.81%

A fifth sector, Technology (XLK) had a gain of 12.21% which was only slightly larger than the SPX.

If we look at gold, silver, and the dollar, we see the following:

  • Silver 18.71%
  • Gold 8.86%
  • U.S. Dollar -0.16%

What else can be said about the sectors at this time?

As of the end of November, the four sectors above were trading above their 30 day and 200 day moving averages. Their trends over the past 3 months have been sideways with the exception of transportation which has been choppy but moving up. Over the past 3 months the utilities sector traded below its 30 day moving average and 200 day moving average and has been trending down.

The consumer discretionary sector had the largest growth in the first 11 months of 2012 and its 200 day moving average showed a very positive upward trend over that period of time. The price channeled down between the middle of September to the middle of November but recently broke above that channel and has moved above its 30 day moving average.

Healthcare, consumer staples, and utilities are considered defensive sectors in that they generally provide stable and predictable earnings. Although they don’t usually show exceptional growth relative to the market, they do consistently provide dividend payments. Here are some recent observations:

  • Healthcare has been trending up over the past 12 months. It also had quite favorable growth of 14%.
  • Consumer staples had been trending up but that trend was broken in the latter part of October. The price has moved back up but is not trending at this time.
  • Utilities has been trending down over the more recent 4 months.

Where’s the market going from here?

That’s the million dollar question. The experts can’t seem to agree on this issue. However, the following sentiment seems to be evident.

  • There is a lack of confidence among businesses
  • Some experts believe there will be problems regardless of how Washington deals with the fiscal cliff
  • Sluggish growth is anticipated in the first half of 2013 but stronger growth in the second half.
  • The Fed’s stated QE policy will likely have a buoyant effect on the stock market.
  • CNBC recently published an article stating that U.S. consumer confidence has plunged on fears of the fiscal cliff.

Recommended Action For Investors:

  1. In spite of the Fed’s stated QE policy in 2013, there will be considerable volatility in the market.
  2. There will be opportunities for profits in the market for the astute trader.
  3. The key is to stay in touch with price action in the market, the sectors, and industry groups.
  4. For a weekly report on price action and trends in the market, the sectors, gold, silver, and the dollar.

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