Over the last year, there have been a few sectors which have been blazing, with many stocks in those sectors doubling or tripling in that time. While the S&P 500 is down about 5% from its December 31st close, some of those sectors have been quite resilient nonetheless.
The social media sector is the obvious standout, buoyed by Facebook’s big earnings move last week. The social media ETF, SOCL, is still trading above its 50 day moving average, quite a feat for an ETF that is up 50% since the summer. The ETF is down 1% so far in 2014:
The solar sector was also red hot in 2013. It is also holding above its 50 day moving average today, though this sector showed more weakness towards the end of last year. However, that mark down has led to a sprightly start to 2014, with the solar ETF, TAN, up almost 10% year-to-date, even after the decline in the last couple weeks:
The biotech sector is technically the strongest of the group. IBB, the biotech ETF, is comfortably above its 50 day ma, and still in a very clean uptrend of higher highs and higher lows. IBB has moved a bit lower in the past 2 weeks, but the ETF is still up about 6.5% on the year:
At the moment, market participants are still comfortable hanging out in these leading sectors. Though it might not happen, I’d be more confident that the current market selloff was nearing an end if we saw more aggressive, capitulative selling in these leading sectors. For now, they maintain their strong uptrends as investors in other sectors scramble for protection.