The Chart Doom & Gloomers Don't Want To See

JC Parets
September 10, 2020

I had a great conversation yesterday with Todd Sohn of Strategas, and our very own Steve Strazza, about Sector Rotation. We talked about this rotation, in theory, and also discussed what the current environment is suggesting.

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The 3 of us were pretty much on the same page that we're getting healthy rotation among sectors and this will likely lead to new all-time highs across the major US Indexes, Sectors and Market Caps. So I asked Todd, what would you tell the Doom & Gloomer out there who is watching/reading this saying to him/herself that we're all completely full of it and the market is about to crash.

Right away he said, "Show them the Equal-weight Industrials breaking out to new highs relative to Equal-weight S&P500:

The equally-weighted charts really tell a broader story, in our opinion. This is definitely our Chart of the Week!

With new highs in this ratio, it's hard to argue breadth deterioration. To us, this is further evidence of breadth expansion! (See: Market Breadth Discussion)

This is healthy rotation. To be clear, it is NOT Consumer Staples breaking out relative to the market. That would be characteristic of a market where shares are under pressure. No, this rotation is into more aggressive, more offense-focused sectors.

I really like this broad-based look at Industrials.

The video will be out soon.

JC

 

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