From the desk of Willie Delwiche.
Key Takeaway: Market volatility has not interrupted rotation to new leadership. Long-term breadth remains robust, but shorter-term trends are in need of repair. Earnings and economic data continue to supply the market with positive surprises.
The Industrials sector made a big jump in our relative strength rankings this week, moving from 7th to 3rd among the large-cap sectors. Elsewhere, Consumer Discretionary continued to lose relative strength and Materials dropped out of the top five. Technology remains highly ranked (2nd overall) but on a short-term basis, it has been a market-laggard. If it cannot re-assert strength soon, its time in the leadership group could be winding down. Our industry group heat map shows overwhelming relative strength from small-cap groups (nine of the top ten & only one in the bottom ten) and widespread relative weakness in large-cap groups (none in the top ten and seven of the bottom ten). Deteriorating trends in the Technology groups bear watching.