Is This Real Rotation Into Laggards?

JC Parets
May 28, 2020

This is a special weekend. The close on Friday marks the end of the day, week and month. That means we have a fresh batch of weekly AND monthly charts waiting for us. This process provides a lot of information because, by stepping back, it forces us to identify the direction of the primary trend.

In the meantime, a few shorter-term charts caught my attention. Both have been horrendous laggards in this market: Regional Banks and Industrials. My question here is whether or not we're seeing a changing of the guard?

Here are Regional Banks relative to the S&P500 putting in what appears like a fairly clean double bottom. Momentum putting in a bullish divergence is a nice touch:

Check out Industrials. In this case, we saw lower lows relative, but again, that bullish momentum divergence showing up:

There's something funky going on here. It's what's necessary for a sustainable bull market, in my opinion, and not the isolated leadership we've seen so far. These are, in my opinoon, 2 of the 3 most important sectors in America, with Technology being the other.

What are you thoughts? I'd love to hear them.

JC

 

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