I'm re-reading "How to Trade in Stocks" by Jesse Livermore. In chapter 3, entitled "Follow the Leaders", he says (at page 21) " Today, in 1940, we have only 4 groups in the position of dominating the market: steels, motors, aircraft stocks, and mail orders. As they go, so goes the whole market." So, in 2014, what sectors lead the whole market? 

Eoin Treacy's view

Thank you for this question of general interest. Leadership is a term with a number of meanings. I believe Livermore was referring to those four sectors as the most dominant in terms of market cap. How they performed necessarily had a significant influence on the market.

Generally speaking at FullerTreacyMoney we speak of leadership as a temporal phenomenon. Following a major decline the sector which bottoms first will have relative strength and leadership characteristics in terms of timing. As the trend develops they may temporarily lose the relative strength characteristic but tend to hold their leadership in terms of timing. This is why we often say, and teach at The Chart Seminar, that “leaders lead for a reason” and “leaders often lead in both directions”.

To answer your question from the perspective of market cap, within the S&P 500, the Level 1 sectors are reasonably evenly weighted with 7 of the 10 representing more than 10% of the Index. Information Technology (19.21%), Financials (15.73%) and Healthcare (13.11%) are the largest.

Among the Index’s 156 subsectors Pharmaceuticals (5.87%), Diversified Banks (4.7%), Integrated Oil & Gas (4.36%), Technology Hardware (4.25%) and Internet Software & Services (3.07%) dominate weightings with a combined 22.25% weighting.

The largest shares in these sectors are Johnson & Johnson, Wells Fargo, Exxon Mobil, Apple and Google. These five shares represent almost 10% of the index.