As we breathlessly count down the minutes to NFP (my guess: +197k vs. expected +170k) let’s take a daily and weekly look at various sectors ‘vs. SPY’…
The daily shows the Financials ratio in trouble as apparently everybody is chasing the bond market higher (yields lower), at least mentally. Energy is down trending, Industrials broke down and the consumer items are firmly down trending vs. SPY. Who’s up? Healthcare, which makes sense if the economy (along with bond yields) is to weaken. Anyway, the ratio has regained its bullish alignment.
The weekly however, shows the Financials ratio still okay and testing support. Energy sucks, Consumers suck, Industrials are testing support and there’s bullish Healthcare again.
Take away: If the economy continues to hold firm or accelerate, yields should rise and Financials would out perform. That would hurt Healthcare. If the opposite holds true I’d bet on Healthcare (relatively speaking), both in line with these charts and in line with my own experience with the Device/Equipment sector in a past life. It was a relatively stable area during contractions and recessions.
Incidentally, I’ve remained short Consumer Discretionary but was compelled to cover and take a teeny profit on a short against Medical Devices (IHI).
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