Momentum Shift

"Everything people were buying they're now selling, and everything they were selling they're now buying." That is how one currency trader, quoted by the Wall Street Journal, described the turnaround in global markets. It's not quite a perfect description but is close enough. A lot can change in three days - and it did.

Prior to last Thursday, the technology sector was the place to be for U.S. equity investors, while financial services and consumer discretionary stocks were in solid downtrends. They're still in solid downtrends, but they've been joined by technology, industrials, and to a lesser degree health care, materials and energy. The remaining islands of stability are utilities and consumer staples. These are traditionally defensive sectors, the kind you would expect to be strongest in a period of economic weakness. It is no surprise, then, that they are rising in relative strength just as more signs of a recession for the U.S. economy become apparent. Meanwhile global strength seems to be shifting from Asia to Europe.