A few indicators to view the market situation internally as the Fed minutes hysteria fades.
Junk bonds are grappling to hold the moving averages and have not broken down. Meanwhile, Junk/Treasury and Junk/Investment Grade are not signaling an impending market liquidity/risk ‘off’ crisis.
We have for many months been tracking the negative breadth divergence of the equal weight SPX vs. the headline SPX. That finally resulted in a quake but certainly not a broken market. Indeed, now Equal Weight is bouncing in a positive market breadth sign, early though it is.
Finally, a look at defensive Healthcare vs. broad SPY shows that the machines are not piling into H/C as a defensive move (I am, however, considering adding XLV on its correction to the SMA 50) but they have favored Utes and Staples lately. Medical Device is a wild card because while it is a cyclically less vulnerable sector, it’s not just you and I who know about it. It’s valuations are rich in some cases (ref. ISRG, EW, DXCM and my own NARI as presented in NFTRH 687). Pharma is relatively okay, but recall that per the long-term yield correlations in this update Pharma is not supposed to do well against rising yields (why then is my JAZZ holding doing so well?). The median stock is bouncing in much the same way Equal Weight above is bouncing.
Just a quick internal view of a market (if you’re not a gold stock player) that is still well intact. As to gold stocks, I’ll repeat until I am blue in the face that the fundamentals never did go positive. They only did so in the imaginations of inflationist gold bugs. While it appears I was wrong to give the seasonal bounce situation a nod the caution all along has been that the counter-cyclical sector is not fundamentally ready.
But point of this update is that the cyclical stuff is intact.