Consumer Defensive Sector failed miserably this week. From being one of the defensive options it went down when the rising employment numbers came and the impression that the economy is stronger than it is was refueled. Rate cuts and rising oilprices now. Strikes with deals. Higher wages. Inflation will rise once again in a few years, I think. The expectations are now for 150 basis points cut from now to the end of 2025. Right now with the positive non farm payrolls report the pace of rate cuts are in line with the Fed´s plan. The Technology Sector was down most of the week but the action on Friday was up.
Our Portfolio went up since it is broad and only involves the trending stocks.
Consumer defensive, Healthcare Sector and Real Estate Sector had troubles this week. Real Estate was the weakest Sector. When things appears to be allright with the economy the market turns to other sectors. However the expected rotation trend from large cap to small caps seems to have stalled. Or it is not yet time for it. The small caps needs capital and are risky. Investors don´t want risk. Traders do sometimes. Now it seems the large companies are back in the spotlight. Russell 2000 is stuck in a range and needs to clear resistance, but it is not near that yet.
Energy Sector did a major improvement move this week and we now await a positive Weekly trend. Not positive with the developments in the Middle East.
Utilities Sector remains strong.
Financial Services Sector and Consumer Cyclical Sector are positive but had a sideways week with a little up on Friday. Communications Services Sector is solid in longer timeframes but had a weak performance this week. Lastly we have the Industrials Sector and Basic Materials that is important to any expanding economy. They are both showing the same pattern in Daily, Weekly and Monthly timeframe. Positive. For a long time the focus has been on Technology and Service Sector. The productive Sectors like Industrials and Basic Materials have underperformed. That will change. It is impossible to manage an economy without them.
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