Here are the sectors that Ken favors. No changes from last week.
I'm still not ready to consider financials or discretionary for anything more than a quick trade off extreme lows. And materials are getting killed and I suspect Ken will downgrade the group soon. Industrials held at prior support, so they may be worth keeping an eye on.
The defensive groups are the leaders, which isn't a good sign for the overall market or the economy, although it seems there is some good money being made in biotech and medical devices at the moment. These are the groups I own, but I'm not adding to positions.
A potential good sign is that discretionary and financials are no longer the weakest groups, since these are early rate-sensitive sectors (as in very low short-term rates such as T-bills and Fed Funds, which we definitely have at the moment).
No doubt that staples are the place to be at the moment, but how much money can you make owning these stocks? To me, staples are the kind of stocks to buy when they are down and out, and you buy them low when you are trying to get a leg up on everyone else. Like when you think the end of the bull market lies around the corner... something like that.
To me, healthcare offers more promise than staples. Partly because of the exciting growth prospects for certain sectors, but also because they have been unloved for a while with the election coming up and health care a major campaign issue. You probably already know this.
I'm on the fence with tech. I bought this group a while back and it disappointed. And then I thought, well, tech is an early growth sector and the ECRI is shows us every week that its leading growth index continues to slowly weaken, so tech weakness makes sense.
But the chart shows potential... it could break either way. Even though in May, prices show a negative lower pivot high, the MACD could issue a higher low as a positive divergence, etc... You can see the technicals yourself. So I'm not buying, just watching at the moment.
