Market review 22.10.30
I regularly show my ETF Leadership Board in these blog posts. But here’s a simpler way to visualize the relative strength across US sectors over the past year:
This one chart says a lot. We looked at the reasons back in May, but to restate them here:
Inflation hit 4-decade highs this year. This led to soaring bond yields, which led to risk assets being rerated lower.
The most duration-sensitive parts of the market got hit the hardest.
Oil stocks are benefiting the most, but there’s also a flight to safety in defensive sectors (staples, utilities, health care) which is keeping them from being negative on the year.
Caught in a tug-of-war are industrials, materials, and financials. On one hand, they are being boosted by rising inflation & interest rates; on the other hand, they could be impacted by global slowdown fears.
Regardless of the reasons, we want to follow strength and avoid weakness. There’s been no shortage of posts in the last few months showing how “cheap” tech stocks have become, and how expensive the leading sectors are. Avoid that thinking.
The strength in energy is clear, but there were opportunities this year in leading stocks within staples and health care. And the further you ventured away from the leading sectors, the tougher it was to find winning stocks.
The tweet below is a good example about the winners in health care:
Within staples, the following tickers all have great weekly & monthly charts: TWNK, K, HSY, PEP, and GIS.
This week, mega-cap tech took a big hit.
However, high-beta growth stocks had a good week. POTX, ARKK, ARKG, BKCH (the past year’s biggest losers) were up 8-11% this week.
As of this writing, crypto stocks continue to rally into the weekend. Dogecoin has more than doubled in the past few days.
This tweet summarizes my view for speculative sectors:
We’re seeing a bounce off big support levels. The bounce could be meaningful and can last weeks, but don’t lose sight of the big picture. Stick to the big trends.
The above tweet is a thread – please read the rest of it as it discusses energy stocks and their long-term bullish picture.
I’ll leave you these tweets to reflect on:
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.