- Posted by DynamicHedge
- on February 11th, 2013
The sectors largely responsible for leading the market higher in the last couple months: $XLF, $ITB, $XLY, and $XLI, currently exhibit a slow down in momentum and underperformance relative to the S&P 500. This is typical for the push-pull of the index versus component and part of a healthy market rotation. A momentum slowdown like this means that the trading environment is now different; breakouts become less reliable, and the market is indicating a need for a pause. In a runaway market, this could be resolved to the upside, but it looks as if some mean reversion is in order.
I’m not saying that this is the end of the bull run by any stretch, but this activity should be heeded for those looking to buy for immediate appreciation. High beta stocks are no longer outperforming, and there is overall heaviness to the tape. If you are watching the longs in your portfolio, no one has to tell you that momentum is slowing.
Disclaimer: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please click here for a full disclaimer.
DynamicHedge is an equities, futures and derivatives trader based on the West Coast. He runs a long/short opportunistic relative-value strategy within a proprietary trading group. More
- Three Ways To Be In Service To the Market
- Underlying behavioral trends
- Pattern Recognition vs Pattern Matching
- Seasons of the market
- Volatility expands at the end of a bull market
- Market maps and cycle changes
- Macro that matters
- Is your brain a fortress or a wild bus ride?
- Sector Momentum Visualized
- Simple rule to improve financial decisions