Global Relative Strength Conditions, 2/8/18

February 8, 2018  |  Michael Reilly

U.S. Equities are still the #1 ranked Asset Class by relative strength.

Within U.S. Equities, Technology remains the #1 strongest sector, and Financials remain the #2 strongest sector on a relative strength basis. Industrials are #3, but are a long way from competing for the #2 spot in the sector rankings.

International Equities are the #2 ranked Asset Class. They continue to close the gap on the leader (U.S. Equities).

Within International Equities, Europe Emerging remains the #1 sector.

There have been two changes since our last update:

  • Within the International Equities Asset Class, the Asia-Pacific Emerging sector has edged out Asia-Pacific Developed for the #2 spot.
  • Commodities have overtaken Fixed Income for the #3 Asset Class.

Six Major Asset Classes

Ranked in order of relative strength:

  1. U.S. Equities
  2. International Equities
  3. Commodities
  4. Fixed Income
  5. Cash
  6. Currencies

We always focus on the top two strongest asset classes in terms of RS (U.S. Equities and International Equities).

We then highlight the top two strongest sectors, in terms of relative strength.

U.S. Equities

Note that the strongest groups in terms of RS are not always the top groups in terms of performance.

For example, the Consumer Cyclicals sector turned in the strongest one month performance, but Technology and Financials (highlighted) are the two strongest sectors on a relative strength basis.

U.S. Sector Performance

Sector/ETF 1-Month 3-Month 6-Month 12-Month
Consumer Cyclicals (RXI) 0.89% 9.87% 14.69% 22.91%
Financials (RYF) -1.00% 7.64% 12.24% 20.27%
Technology (RYT) -1.90% 3.18% 16.30% 27.67%
Healthcare (RYH) -2.31% 4.68% 8.76% 19.13%
Telecom (XTL) -2.36% 4.53% -0.83% -3.47%
Industrials (RGI) -2.85% 7.41% 13.29% 17.40%
Consumer Staples (RHS) -3.44% 5.30% 3.51% 5.30%
Utilities (RYU) -5.41% -10.71% -10.15% -3.22%
Basic Materials (RTM) -5.60% 2.94% 11.99% 14.61%
Real Estate (EWRE) -6.07% -10.76% -7.00% -4.34%
Energy (RYE) -9.85% -3.74% 7.86% -9.96%

International Equities

The table below highlights the performance of the six sectors representing the International Asset Class.

Again, highlighted are the top two strongest sectors based on relative strength.

International Sector Performance

Sector (Fund) 1-Month 3-Month 6-Month 12-Month
Latin Am. (ILF) 3.05% 9.23% 12.05% 20.06%
Midde East (GULF) -0.05% 7.57% 3.26% 0.00%
Africa (AFK) -0.27% 5.61% 11.54% 18.67%
Eur Emrg (TREMX) -0.72% 8.50% 12.53% 23.71%
Eur Dev (EZU) -2.31% 1.67% 6.48% 25.18%
Asia Pac Dev (IPAC) -3.66% -0.05% 8.00% 16.02%
Asia Pac Emrg (EEMA) -4.55% -0.38% 10.63% 28.68%

The top two strongest groups, in terms of relative strength, are not necessarily the top two groups in terms of comparative performance (i.e., 1-month, 6-month, etc.).

Get Our FREE Guide

How to Find the Best Advisor for You

Learn how to choose an advisor that has your best interests in mind. You'll also be subscribed to ADAPT, Avalon’s free newsletter with updates on our strongest performing investment models and market insights from a responsible money management perspective.

Avalon_NewGradient_24Feb22 copy