Trump Pumps, Dow Jumps, Small Caps Slump, Healthcare Dumps

Fun-durr-mentals…

Just seemed timely…

For the second day in a row, Chinese markets flatlined…

Volatile day in European stocks to end the short-week as PMIs hit. Italy was weaker on the day and Germany best on the week…

Small Caps suffered on the week as Trannies and The Dow managed gains ahead of the long weekend…

This was the 2nd worst week for Small Caps relative to Mega Caps in 5 months…

Technology’s role as the best-performing equity sector during this year’s ferocious rally has it trading at more than 19.2 times forward 12-month earnings, a level it hasn’t reached since 2007.

As Bloomberg notes, valuations are a notoriously poor tool for market timing, and forward earnings estimates could prove to be too low, so this alone shouldn’t necessarily serve as a sell signal. However, notice the divergence in fortunes between tech and health care that’s left the former trading at almost 1.4 times the forward valuation of the latter. That’s a rather extreme divergence that seems like a good candidate for mean reversion.

The Healthcare sector continued to puke today, making it the worst week since 2018, but we note that it found support at the 100DMA…

Breadth is starting to fade and yesterday was an outside day closing lower…

Treasuries round-tripped early week losses with yields tumbling the last 24 hours back to unchanged on the week…

The Dollar Index (DXY) surged today (by the most in a month) bouncing off the 97.00 level once again as German Manufacturing disappointed sending the EUR tumbling…