It was an interesting week that saw stronger performances in cautious sectors like Utilities and Materials, even as growth continued its comeback.
I think this trend continues as earnings are delivered and analyzed. The good news is earnings are expected to soar.
The bad news is earnings are expected to soar.
While the broadening of the rally is encouraging, market breadth in general has been unimpressive. But the market starts the week at an all-time high. I suspect there will be more rotation to old-school blue-chip names rather than money seeking the sidelines.
S&P 500 Index | +0.36% | |
Communication Services XLC | -0.07% | |
Consumer Discretionary XLY | +0.77% | |
Consumer Staples XLP | +0.58% | |
Energy XLE | -0.80% | |
Financials XLF | +0.71% | |
Health Care XLV | +0.75% | |
Industrials XLI | +0.22% | |
Materials XLB | +1.21% | |
Real Estate XLRE | +0.15% | |
Technology XLK | -0.02% | |
Utilities XLU | +0.81% |
Market Breadth (Week)
The shift towards blue chip names was evident in the weekly breadth metrics that saw a solid spread between advancers and decliners and new highs to new lows. But the NASDAQ saw more decliners and a surge in new lows. The index has gone from throwing darts to hit or miss.
Market Breadth | NYSE | NASDAQ |
Advancing | 2,048 | 1,894 |
Declining | 1,362 | 2,439 |
52 Week High | 721 | 505 |
52 Week Low | 60 | 203 |
Up Volume | 10.5 billion | 9.3 billion |
Down Volume | 8.8 billion | 11.8 billion |
Technical View
The best performing index has been the Russell 2000, which has struggled of late. Right now, the index is in a head and shoulders formation, and that is typically bearish. The index is a great proxy for the US economy and up and coming companies. I think there is a little short term overbought condition and a little reaction to stumbles with the vaccine.
Portfolio Approach
We added to Industrials on Friday in the Hotline Model Portfolio.
Today’s Session
The biggest earnings and economic data begin tomorrow after the close with Netflix (NFLX).
The market has been steady but clearly needs a spark.
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