Sector, Factor, and Global Edge

Sectors

The sector rankings show little change from last week, and they appear to be settling into their new post-election lineup. Telecom transitioned from negative to positive momentum, putting seven sectors into positive trends and four still moving in the other direction. The top six positions are identical to a week ago, although all are posting improved momentum readings today. Telecom climbed a notch to seventh and pushed Health Care a step lower. Utilities and Consumer Staples swapped places, with Utilities having a fractional advantage between these nearly tied sectors. Real Estate is on the bottom for a third week. It is interesting to note that a little over two months ago, major classification systems classified Financials and Real Estate within the same sector. For the past three weeks, these two have been on opposite ends of our rankings, and today there is a whopping 94-point spread between them. They are clearly two different animals.

Factors
Last week’s upheaval in the factor rankings has stabilized this week, with only minor shifts in relative strength. All 11 categories are reporting improved momentum and two, Growth and Yield, transitioned from red to green. High Beta remains in the driver’s seat, which is expected when the market is in strong rally mode. However, what was surprising was the fact that High Beta held onto the top spot throughout the market pullback of October and early November—a sign of true leadership. Size has firmly nailed down the #2 spot, and Value is in third. Quality moved ahead of Dividend Growth, while Momentum and Low Volatility continue to lag.

Global
The U.S. owns the top global ranking for a second week, and Canada jumped into the second-place spot to put North America in the leadership role. Canada flipped from red to green in the process and pushed Japan and World Equity each a spot lower. Seven global categories continue to report negative momentum, although there were a few shifts this week. China climbed three spots and the Eurozone fell three. China’s ascent broke up the trio of developing market categories that were at the bottom last week, and the Eurozone now finds itself wedged among the basement dwellers.