Weekly Sector Update

I've updated the DJUS Sectors. I've only included weekly charts, not daily this week. I've updated it on the "Resources" tab, and you can find it here.

There is much surmising about which way the indices will break. The choices are simple:

UP
Down
Sideways

Of course, you know that NO ONE knows with any certitude which way it will go. Frankly, I'm tiring a bit of the blowhards that have made all manner of predictions; cherry pick a few of the right ones; and chest thump their s0-called accuracy while ignoring all of the wrong calls that have been made.

All any of us can do is consider the weight of the evidence. I prepare the sector updates each week because I believe that having an understanding of the undulations among the sectors will give one some insight on what is holding up/back the indices. I offer this view which is an extract of the top/bottom performing sectors v. SPY:



Looking only at the SPY, there is only a modest decline over the week. But looking at the sector action, there are two "Holy Guacamole" sectors: Airlines and Business Training.

My point in sharing this with you is that by poking below the surface, you will see things that are not tipped by the hand of the index by a surface reading. Spending a little time looking at the undercurrents will give some insight. There is still sector leadership, but it is changing.

With the USD gaining some strength, then commodities are going to come under a bit of pressure, and you are seeing that in the results above. Also, multi-nationals who have benefited from the tailwinds of a declining USD will soften. I also believe that there is potential for some mitigation of the underlying fear of interest rates increasing to make up for the currency decline which might cause our foreign creditors to demand greater return.

If the USD turns down again (and yes, I'm aware of the arguments that predict the long term demise of our not-so-mighty dollar), then we'll see a resurgence in these sectors. And, we'll see a resurgence once the fundamental picture strengthens.

For now, the sectors that are declining are providing benefit to the economy as a whole because the cost of doing business is less. Watch the small caps for some strength, as they will now be the recipient of tailwinds.