ETF Expert

The S&P 500 is more than 15% off its April peak. In fact, nearly all sector and industry investments have fallen more than a corrective 10% from the top.

Yet there may be another approach for assessing the damage. For example, the S&P 500 index itself hasn’t been at this price level since October of 2009… more than eight months ago. In making this observation, we’re also able to say that the index is still 17% higher than its 52-week lows of last July.

How about other sectors as well as select industries within those segments? How far above their 52-week lows are they?

Three general observations come to mind when I look over the data. First, even though the losses from the top have been greater than average, riskier assets have “paid off.” If you went for the banks via KBW Banking (KBE) or consumer discretionary spending via Consumer Disc (XLY), you made out like a bandit; that is, you made significant gains until the tables turned.

Of course, if the investing environment becomes bullish once more, it may come about because there’s renewed faith in hiring. New employees mean a willingness to spend (XLY) and a willingness to lend (KBE). Yet if the economic recovery appears to be one that is “jobless,” previous leaders might stall.

A second general observation involves the shift in sentiment away from energy and materials. Not only are Energy (XLB) and Materials (XLE) in their own private bear caves, but they haven’t been particularly strong over a 1-year time frame either. While these segments were big time leaders in the global industrial cycle’s revival circa March 2009, both began petering out when China started tightening monetary policy circa October 2009.

Finally, as tough as broad-based energy and broad-market materials have had it, some sub-segments have experienced amazing risk-reward results. Gold Miners (GDX) has been an exception to the materials rule, as the yellow metal has been a hot commodity in spite of a rising dollar.

Meanwhile, the energy partnerships (Alerian AMJ) that are responsible for shipping/storing/transporting oil and natural gas have been spectacular. They’ve not only appreciated in value, they’ve been income dynamos.

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