📈 Market sector update
Lots of overbought signals...
After a very weak December, markets (at leas the SP500 overall) have come back strong in January. I still get a sense there’s a lot of nervousness, though. For example, the famous “Buffet Indicator” is flashing red signals. This data shows which sectors (as represented by their largest respective ETFs) have over/under performed; which sectors might be over bought 🔴 or over sold 🟢; and how their volume is trending ⬛ or 🟥.
Opportunities?
Consumer Staples (XLP) is still trading well below its 50-day moving average and has underperformed the broader market for over a year. Similar to healthcare, consumer staples tends to be a sector that strengthens during a weak economy, but the economy has been anything but weak, and consumer staples have lagged.1 If we do hit a recession, portfolios flock to companies that produce things we use every day (e.g. toothpaste, soap, cereal, etc.).
Most sectors are trading well above their 50-day average. Volume is trending lower for almost all sectors which indicates that overall market enthusiasm is limited.
Note: This is for informational purposes only and is not intended to be personal financial advice; be cautious — there is always risk involved with financial decisions!
For all of the alleged terrible economic performance for the last few years, all of the traditional indicators have not really shown evidence for it.