SMO Exclusive: SPDR Sector ETFs Strength Report Friday 2024-12-13 Weakened -0.2 to 4.4 Strength Score

Brian Degracia

14 Dec 2024 • 11 min read

U.S. MARKET WEAKENED FOR THE WEEK ENDING FRIDAY 2024-12-13. No sectors strengthened, for the second week in a row. Three sectors weakened enough to change rating, six weakened but not enough to change rating. Two were unchanged. The strongest ETFs are XLC/Communications and XLF/Financial at 3Stronger. The weakest ETFs at 6Weak are XLB/Materials, XLE/Energy, and XLV/Health Care, with XLB and XLE both weakening one rating this week.

This post consists of the following five sections:

I. Introduction
II. Weekly Returns
III. Spectrum Graph Analysis
IV. Today's Market Context
V. Detailed Sector ETF Analysis

I. Introduction

Background

This analysis consists of the Stock Market Organizer stock-by-stock strength analysis applied to the 500 stocks that comprise the 11 SPDR Select ETFs.

These results are combined with overall market environment readings (via the Market Strength Score and the Sector Risk Gauge which currently reflect "risk off") to discern appropriate portfolio exposure given prevailing market and sector conditions.

Why do you care?

This dynamic market analysis provides a continuously updated, apples-to-apples comparison of the strengthening and weakening trends in the US market. By tracking the 500 large-cap stocks across 11 key sectors (via SPDR ETFs), this analysis offers valuable insights for investors seeking to harness momentum in their portfolios.

Each week, the analysis clearly identifies which sectors and stocks have gained, remained flat, or lost ground. With this data, investors can objectively assess sector and stock strength, refining their timing and positioning for new investments. Ultimately, this approach aims to enhance long-term portfolio performance by leveraging momentum – a proven market factor – to inform data-driven investment decisions.

Most Important Ranking: Strengthening Status

The following Strengthening Status spectrum graph shows the ETFs based on their current strengthening status, as compared to last week.

Sector rating strengthening and weakening are important signals showing the user where material movement is happening.

These are ordered based on important distinctions - did an ETF strengthen or weaken, enough (or not) to change rating, and where in the ratings scale (aka the spectrum of possibilities) does the ETF currently lie?

This graphic clearly provides this key information at a glance.

The upper and lower portions in these graphics show the same information, presented in different manners. The purpose is to provide a clear understanding of where there is strengthening and weakening, both minor and major, in the sectors that comprise the market.

The upper portions show strengthening from the top row down, while the lower portions show strengthening from right to left. These graphics are set up to clearly convey which ETFs/sectors strengthened or weakened, and from/to where this happened. The market has been weak the past two weeks with no strengthening ETFs. Though it is impossible to determine how long these signals will last (what will be), the critical point is that these are the objective strength levels of these ETFs right now (what is).

II. Weekly Returns

Average Returns

The average returns for the underlying stocks in each ETF are shown below - note this is NOT the return for the ETF for this week. The average returns ranged from -2.7% (XLB/Materials) to +0.5% (XLP/Consumer Staples), with 10 of 11 negative for the week. The best and worst are highlighted below:

Best:

XLP/Consumer Staples, 0.5% average for 38 stocks
XLC/Communications, -0.9% average for 22 stocks
XLY/Consumer Discretionary, -1.3% average for 51 stocks

Worst:

XLB/Materials, -2.7% average for 27 stocks
XLU/Utilities, -2.3% average for 31 stocks
XLI/Industrial, -2.2% average for 76 stocks

Only 1 of 11 positive average returns for the week.

High and Low Returns

The following graphic overlays the lowest and highest returns in each sector.

The XLK/Technology outlier to the upside was AVGO/Broadcom +25% which was a 1Strongest stock before this week's strong rally. The XLK/Technology outlier to the downside was previous upside leader SMCI/Super Micro Computer Inc -17%, which fell in strength rating from 6Weak to 9Weakest.

III. Spectrum Graph Analysis

This methodology uses spectrum graphs to obtain key insights unavailable elsewhere.

Spectrum graphs are a key tool in this methodology that reflect where in the spectrum of possibilities currently lies a measured entity (market, sector, industry, sub-industry, stock) between the extremes of 9Weakest to 1Strongest. This helps the user objectively gauge when and if something is at an extreme. In turn, helpful signals are provided by tracking movements within the spectrum of possibilities.

There are currently four types of spectrum graphs in this ETF analysis:

By Strengthening - this is the most important graph, and it clearly shows in order the ETFs/sectors based on their strengthening/weakening performance during the week:
- Strengthened rating (rating change is most important signal)
- Strengthened but not enough to change rating
- Unchanged
- Weakened but not enough to change rating, and
- Weakened rating (rating change is most important signal).
By Type - logically groups the ETFs (for example, interest rate-sensitive, technology-related, consumer-related) for direct comparison with similar ETFs.
By Strongest to Weakest
Alphabetically

The remainder of this section uses types 2, 3, and 4 above to show current performance.

Context: Comparison to Recent Weeks

The following spectrum graphs by ETF Type show recent Friday week-to-week changes compared to the current week:

11/29/24: Flat/Strengthening
12/06/24: Weakening
12/13/24: Weakening

Weakening for the just-completed week ending Friday 2024-12-13.

Current Status: 4.4 Composite Score, -0.2 Change this week

The following spectrum graph "Strongest to Weakest" shows the composition of the ETF ratings that comprise the current composite score, in order of Strength Rating. This is followed by an Alphabetical spectrum graph.

The upper spectrum graph shows the ETFs in decreasing order of Strength Rating and strengthening for the week while the lower spectrum graph is alphabetical. In the upper graphic, sectors with the same rating are listed as follows: first, sectors that strengthened rating during the week; second, sectors with ratings that did not change during the week but did strengthen; third, sectors with ratings that did not change during the week but did weaken; and fourth, sectors which weakened rating during the week. The color-coded lines delineate different ratings - 4Strong or stronger are separated by green lines, 6Weak or weaker are separated by red lines, and 5Average is separated by black lines.

The ETFs are listed below based on their strength rating.

1Strongest
None

2VeryStrong
None

3Stronger

XLC/Communication (Weakened)
XLF/Financial (Weakened)

4Strong

XLK/Technology (Weakened)
XLI/Industrial (Weakened)
XLU/Utilities (Weakened)
XLY/Consumer Discretionary (Weakened)

4.4 - Composite Score

5Average

XLP/Consumer Staples (Unchanged)
XLRE/Real Estate (WEAKENED RATING)

6Weak

XLV/Health Care (Unchanged)
XLB/Materials (WEAKENED RATING)
XLE/Energy (WEAKENED RATING)

7Weaker
None

8VeryWeak
None

9Weakest
None

IV. Today's Market Context

Key Headlines

"Fed to cut rates next week, bringing an end to first phase of easing"
"Treasury yields end at 2- to 3-week highs as Fed struggles in last mile of inflation slog"
"Egg prices soar — beef, too — and deliver inflation shock to grocery shoppers"
"Calm before storm? Import inflation is low now, but Trump tariffs pose fresh threat."
(Marketwatch)

"Dow slides for a seventh straight day for longest losing streak since 2020"
"Broadcom stock closes up 24%, pushing company past $1 trillion market cap for the first time"
"Fed to cut rates next week but signal cautiousness about slashing more next year: Morgan Stanley"
(CNBC)

Key Current Readings

SP500: 6,051
Nasdaq: 19,927
Nasdaq 100: 21,780
Russell 2000: 2,347
10Y Treasury: 4.395%
2YT: 4.245%
Oil (WTI Crude): $71.09
Bitcoin: $101,222
Dollar Index: 106.94
Gold: $2,666
VIX: 13.81
(CNBC)

V. Detailed Sector ETF Analysis

The following Stock Market Organizer strengthening/weakening analysis looks at the 11 SPDR ETFs and their underlying component stocks for the week ending Friday 2024-12-13, as follows:

ETFs Summaries
1.1 Current: Component Stocks Strength Ratings (1Strongest vs. 9Weakest vs. Ignore Status)
1.2 Current: Component Stocks Positive vs. Negative Weekly Returns
1.3 Historical: 10 Week Ratings by ETF
1.4 Historical: 10 Week Ratings by Week
ETFs Detail
2.1 XLB Materials
2.2 XLC Communications
2.3 XLE Energy
2.4 XLF Financial
2.5 XLI Industrial
2.6 XLK Technology
2.7 XLP Consumer Staples
2.8 XLRE Real Estate
2.9 XLU Utilities
2.10 XLV Health Care
2.11 XLY Consumer Discretionary
Stock Detail (downloads)

1. ETFs Summaries

1.1 Current: Component Stocks Strength Ratings (1Strongest vs. 9Weakest vs. Ignore Status)

The following graphs reflect the composition of each of the ETFs based on their underlying component stock strength ratings which range from 1Strongest to 9Weakest. I only care about the strongest and weakest in each sector and thus categorize as "Ignore" stocks rated from 2VeryStrong through 8VeryWeak.

Top row: XLB/Basic Materials, XLE/Energy, and XLI/Industrial
Second row: interest rate-sensitive ETFs XLF/Financial, XLRE/Real Estate, and XLU/Utilities
Third row: XLK/Technology and XLC/Communications
Bottom row: XLP/Consumer Staples, XLY/Consumer Discretionary, and XLV/Health Care

The headers for each graphic are color-coded. ETFs rated 4Strong or better have green headings - currently, 6 of 11 ETFs qualify. ETFs that changed rating this week have thick green or red borders. ETFs that strengthened or weakened but did not change rating have thin green or red borders.

1.2 Current: Component Stocks Positive vs. Negative Weekly Returns

The following pie charts show the breadth of positive and negative returns for the week for the component stocks of each ETF.

With the exception of XLP/Consumer Staples at 50% positive stocks, the component stocks of the other 10 ETFs were broadly negative.

1.3 Historical: 10 Week Ratings by ETF

Below are 10-week historical strength rating summaries of the ETFs, sorted by ETF - each grouping shows the 10-week ratings change for individual ETFs. This shows the path each ETF has taken over the past 10 weeks to arrive at the current strength rating.

1.4 Historical: 10-Week Ratings by Week

Below are 10-week historical strength rating summaries of the ETFs, sorted by week - each grouping shows one week for all 11 ETFs in newest-to-oldest format. This reveals the weekly strengthening/weakening path of all the ETFs.

2. ETFs Detail

Details for each of the 11 ETFs are provided below. Comments:

The top section shows the strength rating of the sectors comprising each ETF, based on the eight original Stock Market Organizer classifications and NOT the 11 ETF classifications. For example, the XLB Basic Materials ETF consists of 19 Basic Materials stocks, 6 Consumer Goods stocks, and 2 Industrial Goods stocks.

The fully detailed Stock Market Organizer world is comprised of 5 levels: stocks -> sub-industries -> industries -> sectors -> market. The sector definitions do not correspond exactly with those of the SPDR ETFs but for this analysis the ETF stocks are used.

The middle section shows the previous 10 weeks' strengthening and weakening of the relevant sectors. For example, since the XLB has Basic Materials, Consumer Goods, and Industrial Goods stocks, these three sectors are shown in the middle section of the XLB detail. The XLF (Financial) has Financial, Services, and Tech stocks.
The bottom section shows strengthening/weakening for the underlying ETF component stocks, and includes the listing of their Stock Market Organizer industries and sub-industries. These stocks are listed in order based on Sub-industry then strongest to weakest comparative stock strength rating. The Basic Materials XLB ETF includes both Newmont Corporation/NEM in the Gold sub-industry within the Metals & Mining industry and Dow Inc./DOW in the Specialty Chemicals sub-industry within the Chemicals industry.

In these bottom sections, one can visually see the strength/strengthening and weakness/weakening of the component stocks in each ETF.

2.1 XLB Materials (27 stocks, small), WEAKENED RATING TO 6Weak = tied for WORST

The "Status" column for Materials reflects a mixed bag of strength ratings, while the red highlights show 9 of the 22 component stocks weakening this week.

2.2 XLC Communication Services (22 stocks, small), Weakened at 3Stronger = tied for BEST

The strength in this leading ETF is clear.

2.3 XLE Energy (22 stocks, small), WEAKENED RATING TO 6Weak = tied for WORST

Oil & Gas Pipelines is doing well in Energy, while Independent Oil & Gas is not.

2.4 XLF Financial (72 stocks, large), Weakened at 3Stronger = tied for BEST

There was clear weakening in the Insurance industry portion of the Financial sector.

2.5 XLI Industrial (76 stocks, large), Weakened at 4Strong

While there are many 1Strongest stocks here, the many red highlights reflect a fair amount of weakening underneath the surface.

2.6 XLK Technology (69 stocks, large), Weakened at 4Strong

Headliner NVDA has weakened two strength levels from its former 1Strongest rating, while AVGO rallied strongly as a 1Strongest stock.

2.7 XLP Consumer Staples (38 stocks, mid-sized), Unchanged at 5Avg

Consumer Staples was only one of two sectors that was unchanged this week, the only one with at least 50% positive stocks, and the only one whose average return from component stocks was positive.

2.8 XLRE Real Estate (31 stocks, small/mid-sized), WEAKENED RATING TO 5Avg

The red highlights show only weakening ratings this week.

2.9 XLU Utilities (31 stocks, small/mid-sized), Weakened at 4Strong

The red highlights reflect only weakening ratings this week.

2.10 XLV Health Care (61 stocks, large), Unchanged at 6Weak = tied for WORST

Health care had a mix of strengthening and weakening ratings, and remained weakest of the ETFs at 6Weak though it was joined this week by XLB/Materials and XLE/Energy.

2.11 XLY Consumer Discretionary (51 stocks, mid-sized/large), Weakened at 4Strong

Only one XLY/Consumer Discretionary stock strengthened rating this week (TSCO/Tractor Supply Co) while a large number weakened rating this week.

3. Stock Detail

The downloadable PDF below lists all component stocks in order of first Strongest to Weakest ETF and second Strongest to Weakest Stock. The difference between this report and the 11 ETF stock listings above is this report consolidates all component stocks whereas the above listings are segregated by ETF.

SMO SPDR ETF Strength Report Stocks 2024-12-13

SMO SPDR ETF Strength Report Stocks 2024-12-13.pdf

2 MB

Download the following Excel file if you are interested in sorting results yourself.

SMO SPDR ETF Stocks Sortable 2024-12-13

SMO SPDR ETF Stocks Sortable 2024-12-13.xlsx

553 KB