Relative Strength Wednesday: Utilities and Staples Are the Top Sector ETFs. Aerospace/Defense and Capital Markets Top the Subsector ETF List.
Relative Strength Wednesday Rank and Trend Reports
Sector Industry group grades are contingent on three variables.
Bullish relative strength rank transitions within the Sweet Spot of 60 to 120 days (3-6 calendar months)
Bullish Chaikin Money Flow of .1 or higher
At least one of two trends bullish
Long-term trend (10-week > 40-week exponential moving average)
Intermediate-term trend (10-day > 40-week EMA)
US Sector Relative Strength
Industry Group Relative Strength
An “A” grade requires the following:
Relative strength rank average over 3 to 6 months in the top 50% of all ETFs or stocks in the comparison stack AND relative strength rank average over the most recent 10 to 50 days in the top 33% of all ETFs or stocks in the comparison stack
Both the intermediate and long term trends are bullish,
CMF is above .2 (Very Bullish)
This is a very high bar and difficult to find in non-trending markets.
A “B” grade has slightly looser criteria:
Relative strength rank average over 3 to 6 months in the top 50% of all ETFs or stocks in the comparison stack.
Either the intermediate OR long term trends are bullish,
CMF is above .1 (Bullish)
This lower bar is appropriate when markets are consolidation or recovering from an intermediate term pullback.
No grade, simply means the ETF or stock didn’t make the grade.
We avoid looking for stocks in any index, sector, or industry ETFs that fails to grade. However, significant money flow is often the precursor to relative strength—and eventually price-improvement. So when we see FOMO levels of institutional accumulation (CMF > .2) in parent ETFs, we sometimes take a shot at really strong single-company stocks also under significant institutional buying pressure. But, it’s better to have the wind at our back, with an entire sector or industry group coming along for the ride in terms of relative price performance over the most recent 3-6 months period.
Utilities ETFs Ranked
Spotlight Pick:
The Fidelity MSCI Utilities Index ETF (FUTY) aims to track the MSCI USA IMI Utilities 25/50 Index, providing exposure to the U.S. utilities sector. It includes companies across all market capitalizations in the utilities sector, including electric, gas, water utilities, and independent power producers. The "25/50" designation refers to diversification rules ensuring no single company exceeds 25% weight and no group of five companies exceeds 50% weight. This creates a more diversified and balanced index while still representing the utilities sector.Key features include:
Top Holdings: Dominion Energy, Exelon Corporation, PG&E Corporation, and Public Service Enterprise Group.
Sector Allocation: Utilities-focused, including electric utilities, multi-utilities, and water utilities.
Expense Ratio: 0.08% (low-cost).
Staples ETFs Ranked
Spotlight Pick:
The Invesco Dorsey Wright Consumer Staples Momentum ETF (ticker: PSL) is designed to track the Dorsey Wright Consumer Staples Technical Leaders Index. It aims to provide exposure to consumer staples companies showing strong momentum.
Key Details:
Top Holdings: Church & Dwight, Costco, Procter & Gamble, Sprouts Farmers Market, and Kroger.
Sector Allocation: Diversified Consumer Services, Consumer Staples Retail, Food Products, Beverages, Personal Care, and Household Products.
Market Cap Distribution: Primarily small and mid-cap companies.
Tomorrow: Premium Stock Picks Based on Relative Strength