In a post last week, we noted that despite headlines suggesting the strength of the consumer, Consumer Discretionary stocks have been lagging the market in a major way recently. Another way to illustrate underperformance is in the rolling 20-day performance of the S&P 500 versus the Consumer Discretionary sector. As of last week, for example, the S&P 500 was up 4.1% over the trailing 20-trading days whereas the Consumer Discretionary sector was down over 1%. That wide of a performance gap over such a short period of time has been extremely uncommon in the last ten years. In fact, it has been non-existent.

The chart below shows the rolling 20-day performance spread between the S&P 500 Consumer Discretionary sector and the S&P 500. Last week’s nosedive in this reading took it below -5% for the first time since coming out of the recession in May 2009! Besides the fact that we haven’t seen a reading this low in so long, we would note that prior to 2009, these periods of short-term underperformance (and outperformance as well) were a lot more common, occurring every couple of years. During the last recession alone, for example, there were at least four periods to both the downside and upside where the spread was wider than +/-5%. These wide performance disparities don’t only happen during recessions either. During the 1990s, there were multiple occurrences to both the upside and downside. 

(Click on image to enlarge)