Rising interest rates and hawkish comments by the Fed caused a wave of deleveraging on a global scale. Investors pulled out rapidly from equities to reduce exposure, which caused the benchmark S&P 500 index to drop below its 100-day moving average:
The bear market in international equities, both Europe and emerging markets, accelerated to the downside:
Clearly, smart money is rotating into defensive sectors, while technology, cyclicals, and materials continue to underperform.
From the technical perspective, utilities look the best. The Fidelity Select Utilities Fund (FSUTX) made a new high yesterday, and we would not be surprised to see more investment money flowing into this defensive sector:
The relative strength for the telecom and the healthcare sectors is also positive:
The materials and the semiconductor sectors stand out as the weakest performers in 2018: