Financials have just achieved a 2-year relative breakout vs. S&P 500

US Equity indices remain pointed higher and have begun to show a sharp mean reversion in many lagging sectors in the past week that gives credence to the idea of a broad-based rally getting underway.   While SPX and QQQ are certainly a bit stretched on daily charts in the short run, Equal-weighted S&P 500 has just broken out to new highs of the year.  Furthermore, the gains in Transportation stocks, Financials, Biotechnology, Regional Banks have helped the DJIA to join the SPX and QQQ at new all-time highs.   Overall, it’s premature to expect much deterioration in US indices in the short run given this recent broad-based participation.  While some consolidation might occur after July expiration, I don’t feel it should prove too long lasting, nor severe before pushing up into late August.  SPX likely can reach 5800 without many issues, and it remains difficult to bet on any serious mean reversion in Technology without more proof.

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