We divide stocks in all ten economic sectors into four basic, equal weighted baskets:1) Early Cyclicals: These are consumer discretionary companies.2) Hyper Cyclicals: These are financial and technology companies.3) Late Cyclicals: These are energy, material and industrial companies.4) Counter-Cyclicals: These are telecom, utility, consumer staple and health care companies.
Over the last five years the signal given by investor positioning in options and futures contracts on the 30-year treasury bond has proven prescient. Each time commercial traders have moved to a long position in the long bond rates have been near a peak.
Everyday we calculate the percent of stocks in every country within the MSCI World Index that are over their 50-day moving average. Generally, when 80% of stocks in a given country are over their 50-day moving average, this is a short-term overbought signal.
Regular readers know we like to slice the market internal data in a many different ways because a lot of the time the cap-weighted indices aren’t a proper representation of what is going on with the majority of stocks.
On an equal-weighted basis, the energy sector has still been the best performing sector in February. It is nearly 7% higher this month, however, it has been the worst performing sector so far this week (-1.5%).