Commodities saw some selling today, which was a catalyst for the broader market to rally. Leading sectors today in my scan were XLF (on below average volume), IFN, RKH, XHB, KIE, IYR, XLY, IYT, EEM, and RTH. Declining sectors included UNG, GLD, DBB, XLE, OIH, SLX, and USO. UNG was down over 4%, erasing yesterday's gain. Looking at sector charts, we could just as easily have the opposite day tomorrow.
My sense here is that the major story right now is commodities, and everything is reacting to the readjustment of commodity prices to a slowing growth scenario. At some point soon, commodities, including especially oil, will stabilize, and the markets will move on to other things. When that happens, consumer sectors will likely run out of gas. Until then, trades will be short term, with high cash positions at the end of each day.
Today financials bounced on decreasing volume, so I added some short exposure there, particularly in WB. It appears to be one of the weaker banks in terms of fundamentals, and had distribution on Tuesday and Wednesday. I will add to the short position on more low-volume upside tomorrow.
