Sector Rotation Update

Sectors are rotating: Warning sign, market expansion, or simply a dead cat bounce?

Contents:

1. Current Sector Rotation

2. Bullish Percent Index Status

3. Dead Cat Bounce?

4. Pass/Fail Screen for the 11 sectors of the S&P 500 Index

5. ARTAIS AI Universe Screen Results

Sector Rotation

Rotation away from the Technology sector (XLK) and into oversold value areas of the market, like Industrials (XLI), Utilities (XLU), and Materials (XLB), is starting to form:

This rotation into oversold, non-tech names is starting to be confirmed by each sector’s Bullish Percent Index.

The Bullish Percent Index (BPI) is a market breadth indicator that measures the percentage of stocks within an index or sector (like the S&P 500 or NYSE) that are currently on Point-and-Figure buy signals.

Developed by Abe Cohen in the mid-1950s, the BPI ranges from 0% to 100%. Instead of just tracking the price of an index, it gives us a look under the hood at the internal strength or weakness of the market.

(Think of a column of Xs as the offense—buyers—on the field, and a column of Os as the defense—sellers.)