4 Industry Groups Beating the S&P 500

Focus: ETFs

Relative performance and volume analysis confirms these four industry groups are outperforming the market, writes Tom Aspray, identifying stocks from each that may soon set up as good buys.

The importance of watching for sector rotation was reinforced in 2011 when many of the key sectors saw double-digit gains and losses from one quarter to another. This is reflected on the on the performance table below.

Those who started the year long the energy sector did well, as it was up 16.8% in the first quarter. However, those who held on until the end of the third quarter (and ignored the early-May sell signal) were down 11%. Those who bought and held the Select Sector SPDR - Materials (XLB) ended up losing 12.8% for the year despite a fourth-quarter gain of over 17%.

The only steady performer was the Select Sector SPDR - Utilities (XLU), which had an impressive gain of 14.8%. This performance data needs to be compared to a benchmark like the S&P 500, of course, which was unchanged for the year.

Click to Enlarge

Since the market is currently in a corrective mode, sector or industry group selection is likely to be a very important factor in putting together a buy list for when the current market decline is over.

Even though the Spyder Trust (SPY) is down 6% from its April highs, it is still up 12.2% for the year.