It’s the last day of the first quarter, and it was a tough one for the U.S. market. Traders and investors alike were reminded that a financial world of opportunity exists beyond the United States’ borders.
Fortunately, we were able to participate in that emerging move.
But as we head into the second quarter and I sit here looking at the market’s internals, I can’t say I’m too excited about the market’s prospects in the near-term.
Can this change quickly? Of course. But in the meantime, a fair dose of caution is a good idea.
Here’s what I mean
When Defensives Lead, Play Defense
The energy sector has been running the table year-to-date. Interestingly, the price of crude oil hasn’t participated much in this rally with the energy sector.
It is worth pointing out, however, that energy is a late-cycle outperformer. That very outperformance is a telltale sign that a market bottom is near, but we need to start seeing growth sectors like tech come back into the picture. It’s nowhere near that now.
Last week, we saw consumer staples as the only sector to finish in positive territory. This means traders are betting on companies that produce food and sell toiletries over those that sell luxuries. That’s another telltale sign of the market’s risk-off mood.
Clearly, bulls have their work cut out for them going into the second quarter. But don’t worry because I’ll keep you posted as things start to change.
I’ll keep you in the loop,
-Gianni
