From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
In a recent post discussing cyclicals, we posed the following question:
Are Energy and Financial stocks about to lead the market?
Cyclical groups are catching all the right tailwinds in this environment.
Crude Oil and Yields are pressing to new 52-week highs as investors continue to favor more economically-sensitive stocks and commodities in general. This is a bullish development and supports higher prices for some of the most beaten-down risk assets… even Financials and Energy.
As participation has expanded, we’ve been vocal about looking for the winners in each group without a sector bias based on relative strength.
The reason for this is simple… In a market where everything seems to be trending higher on an absolute basis, we want to put less emphasis on looking for leadership groups and instead keep our options open and find asymmetric risk/reward opportunities across the entire market.
In today’s post, we’re going to focus on the Capital Markets Industry. It’s not just offering favorable long setups at both the Industry and component level – which we’ll discuss below – but as a kicker, it’s also an area of relative strength.