Monday, August 30, 2010

It's All Relative

In sizing up the equities landscape, one tool that has proven indispensable is a relative comparison chart. While one can usually determine the strength or weakness of various slices of the market simply by assessing sector and industry ETF's, it can prove rather cumbersome to sift through each chart individually. Relative comparison charts not only provide a quicker, more simplistic alternative, they often offer up the data in a manner which allows more meaningful conclusions to be drawn.

In the past I have used the simple charts offered within Yahoo! Finance's website. However, since catching wind of the impressive free tools offered at ETFreplay.com (hat tip Bill Luby), I've spent the bulk of my relative comparison efforts there. If we wanted to determine which major US sectors have been leading the downturn over recent weeks we could select the sectors in question and view how their performance has stacked up. The following chart displays the relative performance of the technology, energy, financial, consumer discretionary, and materials sectors over the past month (click image to enlarge).

Source: [ETFreplay.com]

Within this time frame, Financials have been the notable underperformer. If you subscribe to the notion that weakness begets weakness, you'd probably be well served by avoiding bullish trades in this sector and perhaps looking instead for bearish plays.

For related posts, readers can check out:
A Primer on Relative Performance
Comparing Apples to What?
Chinks in Small Cap Armor

3 comments:

Siull said...

Hi Tyler,

Here you are another interesting site, maybe you already know, to compare sector performance and its components:

Sector Performance

Cheers,
Lluis

Tyler Craig said...

Hey Lluis,

Thanks for the input. For those unable to use the hyperlink in your post, the site address is:

http://www.sectorspdr.com/sectortracker/

QUALITY STOCKS UNDER 5 DOLLARS said...

Nice charts