$Stock*Shop*Charts*News*Option$

[Tuff-Stuff]

There is a Rotation Afoot

By: Mark Hanna
Posted on: May 1, 2013 at 8:24 am

After breaking a key support trend line that connected the lows of November, December, February and April the S&P 500 has pulled off yet another "V shaped" upward move similar to so many others since 2009. The index finished at new closing highs yesterday and is now up 7 of 8 sessions as we enter an economic and central bank heavy portion of the calendar. The fact it has done this on the back of a slew of poor economic data the world over is even more head scratching impressive. At this point nothing other than global central banker liquidity seems to matter.

We do have an encouraging thing happening under the surface. One of the main "divergences" (that in the end did not matter since price ALWAYS has resolved upward in 2013) of the past few months has been the strength in defensive sectors and the general shunning of pro-cyclical sectors. While one or two "growth" sectors has been in play (i.e. biotechnology of late) it's generally been a market of utilities, consumer staples, and "broad healthcare exclusive of biotech" – the defensives.

This can be seen in the chart of 3 month performance of major sectors.

[please note the far left column is incorrectly labeled by stockcharts.com as "cyclicals" - this is actually the XLY ETF, which is consumer discretionary - i.e. retail.]

more and charts
http://www.marketmontage.com/2013/05/01/there-is-a-rotation-afoot/