This Interest Rate Sensitive Sector Made a Move, and Nobody Noticed
With the exception of the Homies, the groups that typically move up with the bonds are moving. Not that the bonds have noticed.
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Some of the indicators changed! Well, one of them did.
Since the breadth of the market was the best it has been since before the election, the McClellan Summation Index stopped going down. It has not turned up yet and if the market retreats over the next day or so, it is likely the Summation Index won’t turn up. I suspect by the end of next week, it will, though.
But that’s not what I want to highlight. I want to visit the Utes. You know why? They made a new high and no one even noticed. There was not one person that commented on them. Heck, two months ago everyone was crazy for the Utes. Then they corrected and now no one cares.
There are many stocks that gapped up on the day after the election and most of them gave it back. The Utes did no such thing. Rather they are quietly up over seven percent from the lows made early in the month.
I fuss so much over the Utes because they often move up when interest rates are moving down. Not always, but often. And while rates have sat there like they have a lead weight attached to them (much to my annoyance) this group has had no issue moving up.
But it’s not just the Utes. Take a look at the chart of XLP. This group has been correcting since September, when bonds began their descent. But now there is the possibility of a twin bottom in November.
IYR, an etf to be long REITs also seems to be curling under, although in my view it’s not as clean as the Staples, it’s got promise as long as it doesn’t head south under 96.
I have not liked the Homies for quite some time (August) but this chart also hasn’t broken down. I keep thinking ITB will fill that gap at 125 and it hasn’t even been able to get there.
My point with all of these charts is that with the exception of the Homies, the groups that typically move up with the bonds are moving. The bonds, however do not care one iota. Not yet at least. The Daily Sentiment Index (DSI) is at 15 for the bonds.
Speaking of DSI readings, I would remind you that while Microstrategy, the highly speculative Bitcoin play, reversed quite sharply on Thursday, Bitcoin itself did not reverse. Yet its DSI sits at 88. I would not be surprised if BTC follows MSTR in the next week, especially if the DSI gets over 90.
I do think the move in MSTR tamed some of the speculative juices in the market yesterday, although notice I used the word tamed, not eliminated!
