Falling Bonds and rising yields are creating a condition in the global markets where capital is shifting away from Technology, Communication Services and Discretionary stocks have suddenly fallen out of favor, and Financials, Energy, Real Estate, and Metals/Miners are gaining strength. The rise in yields presents an opportunity for Banks and Lenders to profit from increased yield rates. In addition, historically low-interest rates have pushed the Real Estate sector, including commodities towards new highs.
We also note Miners and Metals have shown strong support recently as the US Dollar and Bonds continue to collapse. The way the markets are shifting right now is suggesting that we may be close to a technology peak, similar to the DOT COM peak, where capital rushes away from recently high-flying technology firms into other sectors (such as Banks, Financials, Real Estate, and Energy).
The deep dive in Bonds and the US Dollar aligns with the research we conducted near the end of 2020, which suggested a market peak may set up in late February. We also suggested the markets may continue to trade in a sideways (rounded top) type of structure until late March or early April 2021. Our tools and research help us to make these predictions nearly 4 to 5+ months before the markets attempt to make these moves.
If our research is correct, we may have started a “capital shift” process in mid-February where declining Bonds, rising yields, and the declining US Dollar push traders to re-evaluate continued profit potential in the hottest sectors over the past 6 to 12+ months. This would mean that Technology, Healthcare, Comm Services, and Discretionary sectors may suddenly find themselves on the “not so hot” list soon. Continue reading "Bonds And Stimulus Are Driving Big Sector Trends"