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I am an investment professional with 26 years' experience in investment research and portfolio management. More than 1 200 of my articles on investment-related topics have been published in various regular newspaper, journal and Internet columns (including my blog, Investment Postcards from Cape Town: www.investmentpostcards.com). I have also published a book, Financial Basics: Investment. I am Chairman and principal shareholder of South African-based Plexus Asset Management, which I founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and other African countries. I am 53 years old and live with my wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. My leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily.

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S&P economic sectors tell bullish tale

August 6th, 2009

Many global stock market indices yesterday recorded fresh highs for the year, spurred on by better-than-expected economic and earnings reports, and a fair bit of momentum buying from latecomers to the rally that commenced five months ago. Notably, the ISM Manufacturing Index recorded its seventh straight gain in June. While the reading of 48.9 is still below 50 – indicating ongoing contraction in the manufacturing sector – the data point provided encouragement.

As far as the US markets are concerned, the S&P 500 Index breached the psychological mark of 1,000 for the first time since November and the Nasdaq Composite Index reached the roundophobia 2,000 level not seen since October.

All the economic sectors of the S&P 500 Index posted gains, confirming a pattern of the cyclical sectors like materials, consumer discretionary and industrials outperforming the defensive-oriented sectors such as utilities, health-care and consumer staples. The chart below shows the performance of the sectors since the low of the S&P 500 Index on March 9 and displays the relative pattern one would typically expect during a bullish phase. Although financials outperformed since March, the sector still lags for the year to date (+7.6% versus S&P 500’s +11.0%) as a result of its dismal performance during the first two months of 2009. “If the rally continues, look for the outperformers to continue to do well and the defensive sectors to underperform,” said Bespoke.

sectors-pic1

Source: StockCharts.com

View original at: Investment Postcards from Cape Town

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S&P Daily (All Allan, 3/18/10)
Market In Denial Phase Of Sentiment Cycle (Disciplined Approach to Investing, 3/9/10)
Read more on S&P 500 (SPX) at Wikinvest


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