Sector Heat Maps

Most US markets joined the rest of the world by reclaiming their February peak levels this week. It certainly feels good to have that correction behind us, but a boisterous celebration might be premature. Those February peaks can still be viewed as “resistance” levels, and stocks could easily turn down again. Perhaps in the weeks ahead we will get the evidence that says the former resistance has become the new support, but until then, the best we can say is that resistance is in the process of being pierced. Bonds rallied sharply the past three days and are back near where they started the month.

Sectors: The Energy, Materials, and Utilities sectors continue to hold the top spots in our rankings. Of interest this week is the rise of Healthcare, a sector that has been lagging the market for most of the past four and a half years. Healthcare also exhibits lower than average volatility, so it looks even better on a risk-adjusted basis. The Financial sector has seen some upside action this week, but it is too early to determine if it is truly a sign of renewed strength or just a short-term, counter-trend move of a downward trend.

International: Latin America, Pacific Excluding Japan, and China own the top spots with the European Union and Diversified Emerging Markets close behind. Canada is improving its ranking thanks to its large energy exposure. The “developed” large-capitalization markets of the US, Japan, and the UK are the laggards.