To surrender or not to surrender? That's the question!
After a nice run up in the S&P 500, I started to worry about its ability to push higher when resistance levels coming off previous highs started to act up. At, more or less, the same time, sector rotation of US sectors began to show a pattern favoring more defensive sectors in the lead. Usually not a very good sign for the general market.
This started back in April-May, and the pattern of sectors labeled as defensive leading the market from a relative perspective is still in play.
The Relative Rotation Graph above shows the sector rotation for the S&P 500 sector ETFs (Telecom, XTL added as well). In this article, I will look into the relative positioning of the various sectors in relation to sector rotation models and what that means for the general market direction.
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