Some New ‘Sector Relative’ Charts From NFTRH’s Market Internals Segment

The US Market Internals segment got some new charts this week for additional perspective on the markets (we also added a Global Market Internals segment that is still a work in progress). A little stroll through some inter-market relationships…

The Semis have been leading the broad US market since we caught the Semi Equipment upturn in January 2013. The cyclical indication was economically positive and also market positive.

smh vs. spy

We have considered Semi the leader’s leader, with the more commonly viewed leader being the NDX (QQQ) to SPX (SPY). It’s interesting that the leader is sagging here.

qqq, spy

And yet the Semis are breaking upward as if a new cycle is replicating on top of the existing cycle. A bull nirvana; all bullish forever…

But we can mitigate that with a big picture view that saw the Semis continue to lead big Tech after the broad market had topped in 2000. Also, the Semis kept their little 2008 uptrend channel vs. NDX after the market topped in 2007. So the conclusion is that while Semi is a leader on the front end, it has been a laggard (in getting bear memos) on the back end. The message is that sure, this leading indicator is bull trending right now, but that is consistent with the beginning of the last 2 bear cycles.

Moving on, we’ve added a look at Growth vs. Value, which can be used as an indicator of investor defensiveness, i.e. a move toward risk ‘off’ behavior. The uptrend is intact so risk is still ‘on’ but declining so far in September.

Medical Devices vs. the broad SPY have regained a nearly 2 month uptrend but the daily SMA 50 is starting to slope down and…

…this leadership very well may be testing its double top by the weekly view.

Finally, a look at Biotech vs. regular Tech. It bottomed at the end of May and looks pretty decent here.

Here is the big picture view. IBB/QQQ is a hair above the monthly EMA 30 and is a candidate for an up cycle relative to NDX. Interest rates will surely have a lot to say about that, however. Biotech is one of the items that distinctly favors lower 10yr yields.

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