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Although it seems a bit out of character for consumer staples and utilities to be screaming higher, the hot money will by definition always go where the action is. What we have here is a situation where beautiful twentysomething women are marrying seventy year old men all over the place. If you are wondering where the gold diggers went after precious metals, materials, and commodities as a whole have corrected, look no further than the XLP and XLU, ETFs for consumer staples and utilities, respectively. Names like ED GIS PEP LO MO RAI, and a plethora of healthcare names have all been trading like high growth, high beta technology or consumer discretionary stocks of late.
To be sure, the staples and utes were long overdue for a run, and had probably become quite cheap. At this point in time, though, they are dangerously overbought. Note their steep angles of ascent on the daily charts below. We know that the hot money appears to be chasing yield with these types of plays, which means it is highly probable that we see a self-correcting mechanism kick in soon.
With that in mind, the real issue is where the (smart) hot money rotates over to next. It could be over to the much-maligned financials, back into the materials/energy complex, or into bonds and the Dollar for a quiet summer vacation. I suspect we will have an answer shortly after the rapidly approaching Memorial Day holiday.
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was reviewing the sector charts last night (you’ve ruined my life lol) and was thinking along similar lines (where does the money go next-what are the short etfs for these –again, you’ve ruined my life) but was particularly
interested in XLY chart and if it will break out soon– http://finviz.com/quote.ashx?t=xly
excellent
ED GIS PEP. Tee.hee. Is there historical precedence for rotation after ED GIS PEP gets his? Thx chess
lol