S&P Technology, Healthcare and Financials will likely continue to lead the marketplace this year as evidenced by the strong relative strength and price momentum trends. Since the three S&P sectors account for over 50% of the overall SPX by market capitalization their performances will directly influence the overall market trend.
Nonetheless, these leadership S&P sectors are trading at near-term overbought levels. Since tax loss selling has ended, and if market breadth continues to broaden, as we expect, it is reasonable to expect lagging S&P sectors and S&P names may begin to emerge into early-2020.
Individual names residing within the improving quadrant of the RRG charts can offer investors/traders potential candidates since many of these stocks are not technically extended and most important, are now beginning to show technical signs of improving relative strength and price momentum.
In addition, investors and traders tend to take greater risk earlier in the year seeking out underperforming names with favorable risk/reward opportunities. Enclosed below are the Relative Rotation Graphs (RRG) of S&P Communication Services (XLC), Energy (XLE), Industrials (XLI), and Consumer Discretionary (XLY). Also attached are charts of individual names along with their technical projections based on technical breakouts and risk levels.
Most of these stocks reside within the improving and leading RRG quadrants and most have been undergoing significant technical basing efforts over the past year. This list of stocks is for patient investors and traders looking for technical value names.