Market Commentary: Another pullback for the equity markets this past week, but this time there was no place to hide. During the sell-off that began in late February, bonds provided a safe haven from the turbulence in the equity markets allowing balanced portfolios to do their job. However, bonds have not provided a safe haven in recent market action, and on a “risk-adjusted” basis, bonds have fared even worse than equities. The Lehman Aggregate Bond Index has shed about -2.5% the past five weeks and is now underwater for the year-to-date period. The decline accelerated this past week, and the yield on 10-year Treasury notes is now at 5.2%, after hitting a high of 5.3% in early trading today. One has to wonder, at what point do these yields become attractive enough to entice investors to sell equities and buy bonds.
Sectors: All sector categories lost value and lost momentum this past week. Although the declines were significant, the relative rankings saw little change. Not surprising, Consumer Staples, which is typically considered a “defensive” sector, underwent the least amount of damage. The Utilities sector was already under pressure, and the action of the past week pushed its intermediate trend into negative status. Energy still owns the top spot.
Styles: The strong upward trend that began in mid-March is weakening. Large Cap stocks found support near their 50-day moving averages this past week and are trying to lay the groundwork for another advance. Small cap stocks are looking much weaker than their larger brethren on a technical basis. Small Cap stocks underwent steeper than average pullbacks, and today’s rally only brings them back to their late February level.
International: International markets also succumbed to the recent downdraft, but China showed that it has the capability to chart its own course. China did decline over the past 5-day period, but it’s hardly noticeable on a chart. It maintained its upward momentum in the process and edged back into the #2 spot in our global rankings.
Sectors: All sector categories lost value and lost momentum this past week. Although the declines were significant, the relative rankings saw little change. Not surprising, Consumer Staples, which is typically considered a “defensive” sector, underwent the least amount of damage. The Utilities sector was already under pressure, and the action of the past week pushed its intermediate trend into negative status. Energy still owns the top spot.
Styles: The strong upward trend that began in mid-March is weakening. Large Cap stocks found support near their 50-day moving averages this past week and are trying to lay the groundwork for another advance. Small cap stocks are looking much weaker than their larger brethren on a technical basis. Small Cap stocks underwent steeper than average pullbacks, and today’s rally only brings them back to their late February level.
International: International markets also succumbed to the recent downdraft, but China showed that it has the capability to chart its own course. China did decline over the past 5-day period, but it’s hardly noticeable on a chart. It maintained its upward momentum in the process and edged back into the #2 spot in our global rankings.
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