We've witnessed a major shift in relative strength among sectors and industry groups and in order to prepare for the overall market strength in late-2019 and into 2020, we need to recognize this fundamental shift. Below I've identified a major thematic change in the U.S. stock market, one of many that I'll be discussing at 4:30pm EST this afternoon:
Rotation to Industrials (XLI)
During bull markets, money rotates. It's as simple as that. Periodically, we'll see buyers turn to technology (XLK) and consumer discretionary (XLY). During periods of consolidation and basing, defensive groups will gain strength. Currently, with treasury yields on the rise, we're seeing money rotate into financials (XLF) and industrials (XLI). Let's check out that latter sector:
I see this change continuing for awhile. And in case you haven't notice, Wall Street is telling us the trade war has ended. Check out the one month leadership within industrials:
The industry group leaderboard has done a complete reversal. Groups that led throughout 2019 are now lagging, while former laggards are now leaders.
At this afternoon's "Top 10 Stocks - Sneak Preview" event at EarningsBeats.com, I'll lay out how you can position yourself and your investments to take advantage of this shift in attitude and perception. CLICK HERE for more information.
Also, a fresh new trading week will be underway in a bit. Get my latest thoughts on market action in Trading Places LIVE, my new morning show. Mondays and Wednesdays air at EarningsBeats.com. Here's a link to join today's show, which runs from 9:00-9:30am EST:
Happy trading!
Tom
