Monday Sector Strength
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I don't have much time this morning, so these comments will be brief. Most of the charts below are ratio charts used to determine performance against the broad Wilshire 5000 index.
Last fall the market developed a pattern where one index or sector would outperform for a while, then the strong groups would pause while investors turned to other areas that had lagged eventually pulling most areas of the market higher. This may be happening again as the Industrials index was a strong performer this past week trying to catch up to the rest of the market after having approached a support level. The Transports continue to look strong but are at a short-term resistance level, and utilities have been strong outperformers for a number of weeks, but may now be ready to take a breather.
Maybe soon it will be the NASDAQ's turn to outperform for at least a short time as the NYSE and AMEX have been the stronger indexes. The AMEX looks like it may be ready to take a break, and the NYSE may find resistance at a prior pivot high.
A few weeks ago I noted that the SPX ratio had declined to a level where it might find support, and it has turned up a bit this past week.
I included the chart below just a reminder that this parabolic market remains a concern. It is very extended and overbought, and there may be another sharp correction that has the potential to pull other indexes lower as well.
I've kept my eye on this index because it has so significantly underperformed other areas. If it turns up it has the potential to be a leader. Last week there was a break out above the trading range.
