Here’s a great chart and comment from the Waverly Advisors morning note yesterday.
“Though we are seeing some more intraday weakness, the reality is that this market simply does not want to go down. 1,195 (S&P Cash) has emerged as clear resistance, and the market is consolidating firmly up against that level. The bullish case is strengthened by the constructive action in the XLY/XLP (Consumer discretionary /staples) spread, which we tend to use as a quick and dirty gauge of investor psychology. Historically, there have been very few sustained market rallies not supported by relative strength in Discretionary stocks. This market is certainly not suffering from lack of leadership – we continue to see good strength in Energy and Tech names and we look to these sectors for leadership on any further rally. Financials are still lagging badly, but this sector lagged for the entire multi-month rally, despite repeated assurances from pundits that the market “could not” rally without participation of this important sector. For now, all major themes seem to be intact.”
Bear in mind this was before the mega rally in financials (and everything else today).
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