US equities finished higher in Monday trading. Materials and Technology outperformed while Energy and Industrials lagged. Treasuries were mostly weaker with the curve flattening and the 3M/10Y spread inverting again. The dollar was stronger on the major crosses. Gold finished down 0.3%. WTI Crude settled down 2.8%, falling for the ninth time in the past ten sessions.
- Outperformers: Materials +2.14%, Tech +1.32%, Communication Svcs. +1.27%, Health Care +0.92%
- Underperformers: Energy (1.34%), Industrials (0.04%), Consumer Spls. (0.01%), REITs +0.09%, Utilities +0.33%, Financials +0.60%, Consumer Disc. +0.60%
S&P futures are up 1.1% after US equities rebounded on Monday. Asian markets were higher overnight led by China, South Korea and Taiwan. European markets are moving higher as well. Treasuries are weaker across the curve. The dollar is stronger vs yen and the euro. Gold is down 0.5%. WTI Crude is up 1.5%.
Key Levels To Watch – SPY
SPY has, thus far, held support in the $320 – $325 zone that we have been highlighting. The fund is now oversold and Chaikin Money Flow remains bullish. SPY is above the rising long-term trend line and the Power Bar Ratio is bullish at 105 to 97.
Sector Power Bars
There are currently five sectors with Power Bar Ratios which are stronger than that of the SPY and are bullish. Utilities is the leading sector from a Power Bar perspective thanks to falling rates and defensive positioning. Energy, REITs and Materials are the weakest sectors based on this metric. Additionally, Energy has a Very Bearish ETF rating and Materials have a Bearish rating.
A Closer Look at Sector Rotation
The Communication Services Sector (XLC) Relative to the S&P 500
The S&P 500 Communication Services Relative to the S&P 500 has fallen back into the consolidation zone and below the 200-day moving average. The RSI is moving lower after failing to become overbought on the breakout. The trend remains mildly bullish but is under pressure. We would expect that pressure to persist today as GOOGL is trading lower following their earnings report Trend: Bullish