A quick update on sector rotation

Brian G

Feb 25, 2021

Over a month ago (which seems like an eternity in this current market), I wrote a post titled “seismic shift.” It showed how value, banks, commodities, and small-caps were all outperforming and how this was tied to the rise in interest rates. People like to call this the “reflation trade.”

This trend has not only continued (momentum has a habit of doing that), but accelerated in the past month:

COPX and XOP ETF’s have really produced strong gains. Since posting this breakout 2 weeks ago, XOP is already up more than 20%.

Brian G @alphacharts

$XOP Weekly. 1yr base breakout. The end of a 7yr downtrend.

But now TNX (10-year US Treasury Bond Yield) is facing major resistance. This could put the brakes on the reflation trade, at least for a little while.

Important Disclaimer: This blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.