Between election season, economic data, and September rate cuts all but confirmed, markets are fresh off a volatile week of trading. In fact, Friday’s rally staved off what could have been a cataclysmic close to the week.
In recent weeks, I’ve made a point of updating you on some of the cautionary capital flows taking place in markets.
First and foremost, we have the Dow outperforming the Nasdaq – that’s hardly a risk-on signal.
But check out these other sector updates that suggest treading carefully is the prudent thing to do in the coming weeks…
Healthcare Can Thank Biotech for Its Bid
The top-performing sector last week was healthcare, which certainly has some defensive elements associated with it. Think about this: Even when the economy slows, healthcare is one of the last budgetary cuts people are willing to make.
Even so, I give biotech, a sector I’ve been adamantly bullish about, much credit for healthcare’s recent outperformance.
If you take a look at the 30-day leader, real estate has captured this title, while communications overtook tech year-to-date, and financials are now the one-year leader.
The fact that technology is absent from the sector performance rankings is something of notable concern.
This doesn’t mean the market is going to collapse this week or next, but it does imply that downside risks are rising. And typically, this continues until all the bulls buckle. I’ll be keeping you posted in the meantime.
Talk soon,
