Leaders-Laggards

Tech is finally starting to build some momentum again after getting a bit lost in the shuffle of a cyclical rebound. I don’t think we should ignore the fact that TIPS have been outperforming as strongly as they have over the past month. The potential in emerging markets is still significant, but clarity from China would be a good thing.

Tech is no longer the market leader it once was. Energy stock prices have finally shot higher, but it’s not due to an organic increase in demand. It’s impossible to look at this chart and ask why utilities are doing so well while U.S. equities are rising the way they have. Even as the Fed cuts interest rates, a continuation of the resilient economic numbers should prevent the greenback from falling too far.

This is now a much more balanced market where cyclicals are getting a longer look as the monetary easing cycle begins. My signals, however, continue to be mixed and the performance of utilities is a big reason why. The longer-term uptrend in Treasuries remains in place, but it’s clear that short-term conditions have shifted a bit.