Home » Sector Rotation Is Churning Beneath The Stock Market’s Surface

Sector Rotation Is Churning Beneath The Stock Market's Surface

Sector Rotation Is Churning Beneath The Stock Market’s Surface

Sector Rotation Is Churning Beneath The Stock Market’s Surface

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me. I make less than $100 a month in advertising fees. Otherwise, enjoy the column!

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First, thank you to Market Watch for picking my Italeave commentary for their call of the day! Thank you!

It was as if Italy never happened for the stock market! Today was another perfect example of nothing materially changing in the marketplace, but equities rallied like wild, with the S&P 500 jumping by 1.27 percent, back to 2,724. But there are warning signs out there for different parts of the equity market, and the charts tell a clear story of that.

The rebound in the S&P 500 was inspiring, but the hurdle still sits at 2,742, so we shall wait, to see if get there tomorrow.

spx

Banks

The good news is that financials did bounce today, the bad news is that they did not recover their losses. The charts still look damaged. The XLF, for example, rose today only to its opening price from yesterday morning and then faded.

banks

JP Morgan didn’t even get back to its opening price from yesterday.

Jp morgan

Nor did Citigroup or Bank of America. I’m not going to show you every chart. But it surely must mean something right? In fact, today’s volume in Citigroup was about half of what it was yesterday, with 18 million shares trading today to yesterday 37.6 million yesterday. Bank of America was the same, with roughly 79 million shares trading to yesterday’s 135 million, so was today’s price action because of an absence of sellers in bank stocks? Potentially.

Technology

Now we can look at the XLK ETF and notice the difference with the group recovering all its losses from yesterday.

technology

Nvidia jumped to a higher price, and on better volume.

nvidia

Consumer discretionary stocks also recovered all their losses, with Netflix and Amazon being two such examples.

netflix

Materials

The materials XLB look similar to the XLF.

materials

Staples

Meanwhile, those staples, look at them moving higher!

staples

Both the XBI and the IBB surged today, and much higher than yesterday’s highs. I’m not going even to show the charts.

Go back to the basics, which sectors that are likely to do well in a falling interest rate, rising dollar environment? Well, staples, tech, and biotech for example. Which areas are bound to do poorly financials and materials, yes. Multinationals? Think McDonald’s.

It would seem to me there is a big rotation going on in the marketplace right now. Well, see where it tomorrow goes.

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Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #sp500 #banks #materials #tech #staples #discretionary #netflix #nvidia #jpmorgnan #bofa #citigroup