High Beta extends its run as the top-performing factor since February. Sector rotation out of Health Care ETFs persists as drugs and biotech submit to selling pressure, and North America provides the global leadership.
Sectors
Sector rotation out of Health Care continues as it drops to last place and is the only sector with a negative momentum score. Financials remains firmly at the top, and despite the fact it did not assume the helm until a day after the election, the sector has been in a top-three leadership role since early October. Energy solidified its second-place position as crude-oil prices move higher. Industrials and Materials hold down the third and fourth ranking positions, as the smokestack sectors keep control of the market. Telecom and Consumer Discretionary swapped places with Telecom, gaining the advantage. The defensive sectors of Utilities, Real Estate, and Consumer Staples moved from red to green. However, all of the higher-ranked sectors gained ground, too, so it is a sign that the rally is broadening as opposed to the start of a sector rotation. Health Care fell the last two spots to land on the bottom, as biotech and pharmaceutical stocks remain under pressure.
Factors
There has not been any meaningful factor rotation for many months. High Beta, as measured by the PowerShares S&P 500 High Beta ETF (SPHB), has easily been the best-performing factor since mid-February, when it reversed its 18-month trend of weakening relative strength. Value has been aiming to replace Small Size in second place for the past four weeks, and it accomplished that task today. All other factors are in their previous ranking order, indicating no change in relative strength from a week ago. However, each is posting a higher momentum score today, indicating an across-the-board improvement in absolute strength. Low Volatility and Momentum continue to lag the field for a fifth consecutive week, but they did manage to post positive scores today.
