After an almost celebratory opening on Monday which saw the Dow up 200 points, stock steadily declined throughout the day and closed at their lows. On the surface, the average person saw all of the major indices nicely higher with the vast majority of stocks up on the day. The short-term trader saw a tired market that couldn’t hold early gains and closed at the low tick. Both observations are correct but time frame determines your viewpoint. I fall somewhere in the middle.
As I mentioned last week here and to CNBC India interview, I am looking to go opposite the reaction we see from the BREXIT vote on the 23rd. The hardest thing will be if stocks meander into the vote. I will have more on the BREXIT tomorrow.
Defensive sectors remain in the leadership as utilities, staples, telecom and REITs all behave well. However, don’t overlook energy, materials, internet and industrials. Long-term treasuries and gold put in significant downside reversals so the bears have the ball there. It will be interesting to see how they trade into the vote as well as after.
Finally, high yield bonds are trying to step up again and they will need to if the rally in stocks is to make new highs sooner than later.
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