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“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself.” – George Bernard Shaw
After a strong start to March, major US equity indices have given up all or most of those gains in the last two days. Based on where futures are trading now, today may mark a third step backward for the equity market, although not to the same degree as the last two days. Treasury yields, which have been the tail wagging the market lately, are lower this morning with the 10-year US Treasury yield trading right around 1.45%. The economic calendar is jammed packed with Non-Farm Productivity (weaker than expected), Unit Labor Costs (weaker than expected), and Jobless Claims (in line with forecasts) just crossing. Then at 10 AM, we’ll get Durable Goods and Factory Orders at 10 AM. Fed Chair Powell will also be speaking just after noon.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, some earnings reports from the US and around the world, an update on Eurozone labor markets, an update on the latest national and international COVID trends, including our series of charts tracking vaccinations, and much more.
The Technology sector closed below its 50-day moving average again yesterday, and while many tech stocks have been getting slammed of late, the sector is down less than 7% from its closing high in February. The chart of the sector lately looks a bit ominous though. If you squint enough, you can see what looks like a head and shoulders pattern forming over the last several weeks with the neckline also coinciding with the highs from early September. If that breaks, this March, which came in like a bull (briefly), would likely be filled with more bear.
The Energy sector has been a completely different story. The sector remains right near 52-week highs after recently breaking above resistance from its June post-COVID high.
Given the diverging paths of the two sectors, the performance spread between the two sectors over the last six months now stands at 35.3 percentage points, which is the widest margin of underperformance for the Technology sector relative to Energy in nearly 20 years!
Given the diverging paths of the two sectors, the performance spread between the two sectors over the last six months now stands at 35.3 percentage points, which is the widest margin of underperformance for the Technology sector relative to Energy in nearly 20 years!
