Sector Rotation: Technology and Transportation Stocks Reverse; Flight to Safety Lifts Utilities and Consumer Sectors; New Market Leaders Emerge

The congruence of multiple market forces is causing sudden shifts in the stock market:

  • A dramatic sell-off of large cap technology stocks triggered a flight to safety with potential benefits to defensive sectors, such as utilities and consumer staples.
  • The decline of the dollar versus all major currencies causes rallies in both cyclicals and commodity stocks. The energy sector shows signs of bottoming and bullish turn-around.
  • Higher energy prices are hurting airlines and transportation stocks, in general.
  • International markets continue to be attractive choices for diversification.
  • The strongest sectors continue to advance.

Sector screen is provided by Fidelity Sector Report

Today, large cap tech stocks experienced a classical bearish reversal day: the technology-focused Nasdaq 100 index first made a new record high, but by early afternoon sold off on high volume:

qqq-072717.png

On the other hand, defensive sectors, such as consumer staples and utilities, are attracting attention from investors:

fdfax-072717.pngfsutx-072717.png

The dollar continued to decline against all major currencies:

uup-072717.png

Since commodities are priced in dollar-terms worldwide, the weakening dollar has contributed to the recent rally in commodities stocks:

ffgcx-072717.png

Another beneficiary of the weak dollar is the cyclicals sector, also known as the consumer discretionary sector. Many of the companies in this sector are large multinational companies with overseas earnings that become more valuable when the dollar declines.

fscpx-072717.png

Increasing energy prices are helping energy stocks, but hurting the transportation sector.

fsenx-072717.png

 

fsrfx-072717.png

International investments in Asia and Europe continue to do very well in the current market environment:

fseax-072717.png

The strongest domestic sectors right now are the media, defense, and materials sectors:

fbmpx-072717.png

fsdax-072717.png

fsdpx-072717.png

 

.

 

 

 

 

 

 

Advertisements

One thought on “Sector Rotation: Technology and Transportation Stocks Reverse; Flight to Safety Lifts Utilities and Consumer Sectors; New Market Leaders Emerge

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s