Market review 24.11.16

The contrast between financials and commodities

Hello everyone,

I’ll discuss market leadership in today's post before diving into specific sectors. The market is giving us a clear message, especially regarding the financials and commodity sectors.  

Relative Strength

The 52-week highs/lows board shows Bitcoin, banks, and Big Tech leading. Commodity ETFs dominate the laggards.

The SCTR board is more sensitive to changes in leadership. While this board also shows Bitcoin and banks leading, there is a contrast regarding the laggards. EFA, biotech, gold miners, and semis now have the lowest SCTR values (among the most liquid ETFs) after their recent pullback.

Let’s now look at charts for the sectors discussed above.

Sector Charts

Dow Jones US Banks Index, Monthly. Back in August, we saw banks retest a 7-year base. That served as a key pivot before banks marched higher. A couple of weeks are still left in the month, but this index is on track to make a major breakout.

SOXX Weekly. The mighty semis had an almost 3x rally off the 2022 lows. The sector has been building a healthy base all year. Nvidia reports earnings on Wednesday afternoon. Let’s see if the neckline around the $200 level holds.

XBI Weekly. Biotech looked promising last week, with a multi-quarter breakout and relative strength. The ETF made a sharp reversal this week on what could be tighter government policy for the sector under Trump (link).