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“Commonplaces never become tiresome. It is we who become tired when we cease to be curious and appreciative.” Norman Rockwell

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

US equities paused for a water break this morning as futures trade with a modestly negative bias and yields decline. For all the talk about how a Trump victory would cause a leg higher rin interest rates, the 10-year yield has basically gone nowhere since Monday’s close. International markets are mostly lower as China declined 1% following disappointing news regarding the hoped-for stimulus measures. Crude oil is also following equities lower, but Bitcoin is modestly higher trading right near all-time highs. The only economic report on the calendar this morning is Michigan Sentiment at 10 AM.

The snapshot below from our Trend Analyzer shows where major US index ETFs closed yesterday relative to their trading ranges. Talk about extreme! All 14 of the ETFs listed closed at ‘extreme’ overbought levels (2+ standard deviations above their 50-DMA) yesterday, and each one was up by a minimum of 4.5% over the last week with small and micro-cap related index ETFs up by nearly twice that. It’s been quite a race as every index ETF looks to sprint to the front of the pack.

These moves are a bull’s best friend and usually a hallmark of a strong market, but momentum like this is unsustainable. Just as you can’t start a marathon with a sprint, the market will run out of gas sooner if it doesn’t properly pace itself. It can’t keep sprinting at an intense pace of multi-percentage points per week without tweaking something. It’s natural to have at least a pause, so set your expectations accordingly, and don’t get greedy.

While things look extremely uniform at the index level, sector performance has shown much more dispersion. As shown in the snapshot below, three sectors posted declines over the last five trading days. While six sectors closed yesterday at overbought levels, three finished the day in oversold territory (Consumer Staples, Real Estate, and Health Care), so the gains have been much less uniform beneath the surface.