Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.
This week we want to highlight the continued divergence between Energy stocks and Oil using our Sector and Industry ETF and Commodity tables.
First, let's look at some of the longer-term leaders. Biotechs (IBB) just broke out to fresh multi-year highs and are one of the top performers on our Industry ETF list across all timeframes.
Aside from Gold Miners (GDX), they are the only industry on our expanded list of over 50 ETFs already back at fresh 52-week highs. Definitely some relative strength worth paying attention to in these areas.
This is an intermarket world that we live in. If you think what happens in the commodities and bond market isn't directly tied with what's also happening in the stock market, you've got a lot of homework to do.
You guys who have been following around along time know that we start out every single conversation about the stock market with, "Okay, what are bonds and commodities doing". It starts there. And then we go into the asset in question.
Look at Crude Oil still crashing down to new multi-decade lows:
Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.
As this is something we do internally on a daily basis, we believe sharing it with clients will add value and help them better understand our top-down approach. We use these tables to provide insight into both relative strength and market internals.
Today's Chart of the Day, High Yield Bonds (HYG) vs Short-Term Treasuries (IEI), is one of our favorite risk-appetite ratios.
Credit Market investors favor High Yield Bonds over Treasury Bonds during the "good times" - periods of strong economic growth, rising rates, etc. On the other hand, we know treasuries are a safe-have asset and outperform in environments where investors are uncertain and want a place to park their capital until the smoke clears.
Every weekend we publish simple performance tables for a variety of different asset classes and categories along with brief commentary on each.
As this is something we do internally on a daily basis, we believe sharing it with clients will add value and help them better understand our top-down approach. We use these tables to provide insight into both relative strength and market internals.
This week we want to highlight our US Equity Index and Factor tables, as they are both showing near-term reversions in some of the most robust long-term intermarket trends.
The trend for stocks is down. When they do rally, they scream dead-cat bounce. And bonds keep going out at new all-time highs every week. Gold is at its highest prices in 7 years and Interest rates are in free-fall along with bank stocks. What type of environment does this appear like to you? Is it the kind of market where we want to be buying stocks aggressively, or is this the type of market where we want to be smaller, cash heavy and more defensive?
Let's try to figure it out together.
First of all, Industrials historically have the highest correlation with the S&P500 of all the S&P Sectors. This is what that group currently looks like. One of our most basic technical principles is that former support turns into resistance. We call that Polarity. You can see this taking place in this sector index:
Every weekend we publish simple performance tables for a variety of different asset classes and categories along with brief commentary on each.
As this is something we do internally on a daily basis, we believe sharing it with clients will add value and help them better understand our top-down approach. We use these tables to provide insight into both relative strength and market internals.
This week we want to highlight our US Equity Index and Sector tables, as they are both showing continued evidence to support some of the trends we've discussed recently.