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September 23, 2011  Fri 12:21 PM CT

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While we have seen a rebound of sorts today in the S&P 500 following some conflicting information on potential action for banks in Europe, the overall health of the index remains poor.

That is less a function of current technical levels and more one of breadth. Using a map of the sectors based on returns and percentage weight in the index, it is clear that there has been a palpable deterioration since the last time we reviewed the sectors.

The graph below shows that financials and materials are the worst performers so far this year. The financials are down nearly 27 percent and the materials more than 20 percent. On Sept. 7 the financials were off just 20 percent and materials down a hair over 10 percent.

Together these two sectors make up nearly 17 percent of the S&P 500. So it's clear that the index won't get very far without a recovery in those areas.

Even the sectors that have performed best this year have slipped since the start of the month. Health care has lost almost all its gains, now up fractionally at 0.03 percent after losing nearly 5 percent at the start of the month. That sector makes up over 12 percent of the index.

Consumer staples has also lost nearly all of its gains and is now up just 0.27 percent versus a gain of 4.66 percent at the start of the month. It too is relatively heavily weighted in the index at more tha 11 percent.

The industrial sector too has dropped significantly, off more than 10 percent at the start of the month but down nearly 16 percent today. It carries an index weight of more than 10 percent.

Perhaps most surprising, given the strong rally in Nasdaq stocks, is what has happened to technology. That sector is virtually unchanged since the start of the month, down a bit more than 5 percent as it was then.

This may be the sector to watch, either way, because it has not been subject to the same downward forces as other sectors. At more than 22 percent of the index's weight, it may hold the key as to what happens next.

S&P 500 Sectors

(Graphic courtesy of DeepFoo Analytics)
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