Sector Detector: Year-end market strength can't change fundamentals

Scott Martindale

Just a quick update while I'm on vacation this week.

Latest rankings: There is a slightly more defensive posture to the SectorCast-ETF rankings this week. Healthcare (XLV) still sports the best valuation with dominating score of 87. But second place is now taken by Utilities (XLU) at 75. Consumer Staples (XLP) is in third at 71, followed by Information Technology (IYW) with a score of 67. The rise of Utilities comes in the wake of a strong run by IYW over the past week -- perhaps indicating that InfoTech is getting a bit ahead of itself from a fundamental valuation standpoint.

Again, the bottom of the rankings finds Materials (XLB) as the fundamentally most overvalued sector with a low score of 24, followed by Industrials (XLI) in ninth (of the 10 sectors) at 39. Both scores are the same as last week.

These scores represent the view that Healthcare and Utilities stocks may be undervalued overall, while Materials and Industrials stocks may be overvalued.

That's all I have for you in this abbreviated update. I'll have the full analysis, including top and bottom stocks, next week.

Happy Holidays.

Disclosure: The author holds no positions in the ETFs mentioned.

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