Stocks are off the recent highs to start the week, and as I surfed “FinTwit” over the weekend in between my charting sessions, I still saw a lot of negativity surrounding the state of markets.
Are we overbought near-term? Sure. Does that mean that we’re automatically going lower? Absolutely not.
I talk about time a lot because markets don’t have to always correct through price. They can correct through time instead.
And as it turns out, when we see a sector leadership board like we do now, the odds favor the “correction-through-time” outlook.
The Market Giveth and the Market Taketh Away
Can we just take a moment to appreciate this leaderboard? Bulls are completely running the table, yet so many people out there want you to believe that this market is about to fall apart.
There is not a single sector on this leaderboard that is bearish. Tech is absolutely crushing it in the near-term, and I reiterate that this is something that we see a) coming out of important market bottoms; and b) when bulls are in control.
We even saw utilities (XLU) drop from the year-to-date leader over the past week, which I expected, and it was overtaken by industrials (XLI). This is also a pro-growth sector.
Then we have communications (XLC) as the best-performer over the past year. This tells us Internet themes are still in play too.
These sector rankings are a stark contrast from what we saw back from late February to early April. This is a completely different market, and if you can remember that sentiment follows price, and not the other way around, you’ll be way ahead of the curve.
Stay tuned,
-Gianni
