Our latest analysis shows Financials shining as the third-best sector, while Materials continue their historical underperformance.

When analyzing returns by sector during election years, we find that Financials has been the best performer over the last 50 years. This year it is the third-best sector.

Historically, the worst performer is the Materials sector, which is currently the second-worst performer.

In the borrowing market, the volume of Financials being borrowed has decreased, while borrowing of Materials has increased year-to-date (YTD).

This trend in the borrowing market suggests a strategy of going long on Financials while shorting Materials,

In the graphs the green is financials and the blue is materials.

Source: S3 Black App

This trade could continue to perform based on historical patterns.

The graph shows that BK and V, financial stocks have become less shorted (Green). and materials stocks SHW and APD have become more shorted (Blue).

For the market as a whole the average performance is 7% for the year below the average of 10% and the average for the year before of 17%. The market is up 10% this year. The recent correction pushed the market towards the mean.

It does seem that many were short before the sell off.

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