Over the last several months - going back as far as late last year - we’ve been pounding the table in favor of three sectors…. utilities, telecom, and energy. Though a huge runup in Q1 and a devastating pullback in Q2 trumped the idea of worrying about sector leadership, now that the dust is settling, we can again turn our attention to spotting emerging leaders. Care to guess which sectors are emerging as those leaders?

While energy stocks have been a letdown since we took interest in them, telecom and utilities have indeed made their way to the head of the class since the early-July bottom. And interestingly, they really didn’t yield during the most recent dip. In other words, this leadership has been quite unwavering.

The chart below puts it all in perspective. Though transportation and industrial stocks were the big winners of Wednesday’s bullish madness, over the past two months or so, telecom and then utilities have been the market’s best sectors. Staples was a respectable third, but only utilities and telecom stocks are back in the black for the timeframe.

And energy? Though not at the very bottom of the pile, it’s close to it - thanks to a minor contraction in the price of oil that was interpreted as a major decline in investors’ heads.

Anyway, the chart is what it is, and it doesn’t lie….. 2009’s absolute worst performers are starting to emerge as the best performers, at a point in time when nobody expected it. One can assume these trends will stay in place until we get the same visual clue that their momentum is waning.

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