Sunday, April 19, 2020


As part of our weekly scoring of general conditions we record the 1-week, 1-month and year-to-date performance of major U.S. sectors, as well as regions, long-term treasury bonds, gold, silver and copper.

I thought I'd share our snapshot with you and offer up a little commentary on the sector data:   click to enlarge...

Note the year-to-date results for U.S. sectors: While the S&P 500 Index is only down 11% year-to-date (down ~15% off the highs), the (traditionally) most cyclical sectors -- financials, industrials, transportation, materials, commodities and energy -- remain very much in bear market territory. While the more economically-defensive sectors -- healthcare, staples, utilities -- are enjoying only single-digit losses to this point. So, yes, despite the recent rally, stocks overall are still reflecting a negative economic picture.

Well, okay, but that's on a year-to-date basis, look at the one-month numbers; the cyclical stuff has rebounded strongly!

Yep, but then when we look at the past week (one where the major averages screamed higher), save for energy, those cyclical sectors dropped in value. In fact, 7 out of the 13 sectors actually lost money last week.

Bottom line: On top of the really messy daily (volume, breadth, etc.) action of late, the trend in breadth of the simple returns data paint an uninspiring picture. Crazy strong rallies amid messy internals is classic bear market stuff.

Ultimately, as the economy truly begins to regain its footing, this study will begin flashing us an early signal, one that we'll be looking to confirm with other macro data... Definitely not the case at this juncture...

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