Worrying technicals on housebuilders

Last month I looked for interesting sectors to invest in based on relative strength.

The “buy” candidates are the bombed out ones. I would like to ammend my selection criteria slightly by seeking those sectors with very low RS5y (relative strength over 5 years), but positive RS1y (relative strength over 1 year).

The big underperforming sectors over 5 years are tech, mining, electricity, industrial metals, and anything oil-related. Technology, and the oil sector are still down over one year, suggesting it is still not time to buy. Mining, electricity and industrial metals are the interesting sectors.

Contrariwise, when seeking sectors to sell, look for ones that have high relative strength over 5 years, but are underperforming over 1 year. The stand-out sector is housebuilding. Housebuilders are up 142% relative to the market, but they have been flagging decidedly over the last year. Investors seem to be taking money off the table.

Here is the full table, which has AIM companies excluded:

   RS5y    RS1y Sector
 179.06   -2.49 FORESTRY AND PAPER
 141.97  -21.48 HOUSEHOLD GOODS AND HOME CONSTRUCTION
  74.29    8.35 HEALTH CARE EQUIPMENT AND SERVICES
  68.48    4.88 GENERAL INDUSTRIALS
  68.20   -0.03 PHARMACEUTICALS AND BIOTECHNOLOGY
  59.79  -14.32 FOOD PRODUCERS
  59.28    4.66 CHEMICALS
  55.60  -12.06 FINANCIAL SERVICES
  54.45   11.14 INDUSTRIAL TRANSPORTATION
  48.15   -7.18 MEDIA
  47.30  -12.27 LEISURE GOODS
  45.06   -9.63 CONSTRUCTION AND MATERIALS
  38.59  -13.97 TRAVEL AND LEISURE
  34.03    0.93 AUTOMOBILES AND PARTS
  33.95   -9.34 SUPPORT SERVICES
  33.52   12.80 ELECTRONIC AND ELECTRICAL EQUIPMENT
  30.70    6.53 TOBACCO
  30.50    1.86 PERSONAL GOODS
  29.35  -15.48 LIFE INSURANCE
  29.25   -5.29 SOFTWARE AND COMPUTER SERVICES
  28.08  -12.07 FIXED LINE TELECOMMUNICATIONS
  21.79   -4.55 NONLIFE INSURANCE
  21.37  -38.28 GENERAL RETAILERS
  21.02   -7.57 GAS WATER AND MULTIUTILITIES
  18.78    5.96 INDUSTRIAL ENGINEERING
  16.33  -20.82 REAL ESTATE INVESTMENT TRUSTS
  13.72  -14.18 BEVERAGES
   8.02  -11.32 FOOD AND DRUG RETAILERS
   3.98  -18.64 MOBILE TELECOMMUNICATIONS
   3.86    7.63 EQUITY INVESTMENT INSTRUMENTS
   0.54  -25.94 REAL ESTATE INVESTMENT AND SERVICES
  -8.95   -4.96 AEROSPACE AND DEFENCE
 -13.46  -20.09 BANKS
 -34.92   -7.22 TECHNOLOGY HARDWARE AND EQUIPMENT
 -53.58   55.68 MINING
 -53.78    9.25 ELECTRICITY
 -57.41  -15.56 OIL EQUIPMENT SERVICES AND DISTRIBUTION
 -72.65  184.81 INDUSTRIAL METALS AND MINING
 -72.99   -7.97 OIL AND GAS PRODUCERS

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About mcturra2000

Computer programmer living in Scotland.
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