According to the numbers above, Energy sector, with a gain of 8.3% since 8/17/2009, is the best performer in the latest rally. Because it was not the best one in the two previous rallies, the one starting from 3/9/2009 and the one from 7/10/2009, Bespoke's analysis shows that trader's interests are shifting from Financial (the previous hot spot) into Energy. Thus, if the rally continues, bulls may want to long some energy stocks to take the advantage.
As you may already know, there are a couple of mysterious Greek letters in the investment world. Among them, beta describes the relative speed a stock moves with respect to the market, which is usually benchmarked by the S & P 500 Index. For example, a stock has beta 2 will move 2% if S & P 500 moves 1%. Thus, the 8.3% gain of Energy may not necessarily mean that it is stronger, it might be that Energy happens to have a larger beta. If so, Energy would drop faster when market turns, and longing it would not be an advantage anymore.
I adjusted Bespoke's numbers by the beta of each sector and list them below. Since I don't have sector's beta available, I simply use that of the corresponding SPDR sector ETFs as a proxy. I also listed their difference to the S & P 500 Index, to show the relative strength.
As it shows, Energy is still the best performer. However, the worst performer is now Technology. The minimum 2.68% advance of Consumer Staples just reflects that it has the lowest beta among all sectors.
Please note that this analysis doesn't equal to a suggestion of shorting Technology at this moment. If the rally keeps going, all sectors will get lifted. Likewise, it doesn't not guarantee profit of longing Energy. It simply says that longing Energy is potentially more profitable if market keeps going up.
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