Sector rotation that has been going on for about a month is no longer stealthy and cannot be ignored. Last week, Energy was the best performing sector followed by Financials and Industrial, while defensive names like Utilities and Consumer Staples were the worst performing.
Growth at any price may have found a price. Technology and Communication Services names put in pedestrian performance, and even this morning look rather lackluster, which is why the NASDAQ is indicating to open lower while the S&P could pop at the starting bell.
If you want to see a longer-term sustainable rally, then you want to see continued rotation into other areas of the market.
S&P 500 Index | +4.91% |
Communication Services XLC | +2.76% |
Consumer Discretionary XLY | +5.68% |
Consumer Staples XLP | +2.01% |
Energy XLE | +15.69% |
Financials XLF | +12.09% |
Health Care XLV | +0.19% |
Industrials XLI | +10.52% |
Materials XLB | +7.90% |
Real Estate XLRE | +6.93% |
Technology XLK | +3.51% |
Utilities XLU | +2.51% |
Cleared for Takeoff
Keep an eye on Industrials, which continue to fly high led by airline names. This morning’s drivers:
- Mesa Airline (MESA) May operating metrics
- Alaska Airline (ALK) upgrade at Bank of America
- Boeing (BA) upgrade at Seaport and target $277
The Sector (XLI) breaks out at 76.00 and could quickly climb to the 2020 high point.
Sharing the Wealth
Last week was remarkable, not only because the market rocked, and more stocks turned positive for the year, but the rally did not need leadership from Technology or Communication Services.
- Winner 182 from 110, +12.5% on average
- Losers 323 from 395, -17.1% on average
Portfolio Approach
We are adding a position in Technology this morning in our Hotline Model Portfolio.
Today’s Session
This morning, Wall Street is catching up with the market with major upgrades.
- Amazon (AMZN) $3300 from $2700 at RBC Capital
- Lulu Lemon (LULU) $360 from $230 at TAG