From the desk of Willie Delwiche.
Key Takeaway: After record strength, breadth is taking a well-deserved breather.
This has the hallmarks of digestion more than divergence, especially after recording yet another breadth thrust. Re-opening optimism is running high and bond yields around the world are climbing.
With earnings and economic expectations still being revised higher, the path of least resistance for stocks remains higher even if we are starting to see a few more tripping hazards.
The Financials sector took over the top spot in our large-cap relative strength rankings even though leadership has not been as evident at the mid-cap and small-cap level. Our industry group heat map shows that while banks are improving at all cap-levels, no Financials-related industry groups are near the top of the rankings. Energy climbed into the third spot in our rankings, strength that is supported at the mid-cap & small-cap level. Technology remains in the leadership group, but there is some deterioration being seen at the large-cap and mid-cap level. Small-cap Technology-related industry groups remain quite strong.
