Markets continue on their path higher to least resistance and risk on seems to prevail with each session. Small caps and commodities are advancing on an almost daily basis. The Russell 2000 rose .8% more than doubling the .3% gain that the Nasdaq and S&P 500 posted. The weaker greenback which is descending on the uncertainty surrounding interest rates is giving a boost to crude which we all know has contributed greatly to the markets strength. The move has spilled over into other commodities like silver with the SLV jumping almost 4% Wednesday and gold which is higher by more than 4% the last 7 days. Sectors that led today were the materials that benefit from the weaker dollar, the utilities and the industrials. The bears who are fiercely clinging onto their negative views with their confirmation bias. will point to their leadership as a weak one, but in reality it is just a broad based rally from a very diverse number of sectors. Looking one year returns the XLU and XLP are your two best performing groups with gains of 22.8 and 16% respectively. This is not defensive in nature, perhaps before QE, but in these times with investors desperate for yield, they are simply bond proxies. Of course there will always be laggards like a lot of retail, think RL or MIK or RH after hours this evening, but that is more than being made up for with power in homebuilders and gambling names for instance. Below is the chart of MGM and exactly how it appeared in our Tuesday 5/31 Game Plan. The stock is now higher by 6% since breaking above a bullish inverse head and shoulders.
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