Utilities has broken back out to new all-time highs

Short-term trends in US Equities remain bullish but could potentially face some consolidation starting mid-next week. Market breadth has slowed a bit after a strong push higher in April, and there has been some evidence of defensive outperformance in recent days. However, price has not given any indication of breaking its uptrend, and until this happens, it remains right to stick with this trend. As mentioned yesterday, “Safe-haven” trades like Gold, Treasuries, Japanese Yen, and/or Swiss Franc have all shown signs of starting to bottom out, and these should all begin to turn higher in the back half of May. Overall, it’s been an encouraging rally for US Risk assets from early April, and despite the urge to try to sell into this move, there hasn’t been enough proof yet to justify that this rally has run its course.  

Despite some impressive movement out of Utilities and REITS this week, sectors like Technology have thoroughly dominated performance over the past month. Moreover, this hasn’t been just “Magnificent 7” stocks, but Equal-weighted Technology, which has shown substantial outperformance.

I view this as a big positive for the months to come, even if a minor setback gets underway in late May.   Sectors like Consumer Discretionary, Industrials, and Financials all appear like Overweights along with Technology.  However, sectors like Utilities are also Overweights, technically and the Equal-weighted Utilities sector ETF ($RSPU) just made a new all-time high today.

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