A 'Riptide Warning' in the Markets Means These Sectors Are Outperforming

Last Thursday, I discussed what could be the start of a new trend in the markets... and why it could be the beginning of a "riptide." [Chaikin PowerFeed]( A 'Riptide Warning' in the Markets Means These Sectors Are Outperforming By Pete Carmasino, chief market strategist, Chaikin Analytics [Last Thursday]( I discussed what could be the start of a new trend in the markets... and why it could be the beginning of a "riptide." Put simply, the tech-heavy Nasdaq 100 Index is breaking down versus the broad market S&P 500 Index. As I explained, we can see that through the recent weak relative strength of the Invesco QQQ Trust (QQQ) versus the SPDR S&P 500 Fund (SPY). But it's more than just a bit of underperformance in tech... I'm also seeing current trends play out in some specific sectors. Markets are heavily rotating in these areas. This tells a story of where the "smart money" is flowing. Now, some folks might view this as a "broadening out" of sectors – meaning that the lagging, "old industrial" type sectors are just catching up to the hot tech stocks. And that may be true. But no matter the outcome, these look like early signs of something else. You see, investors are turning to "hard" assets. And these are the sectors that institutions turn to when they prepare for a specific type of storm... Recommended Links: [Here's What You Missed Last Week]( A rare market anomaly just caused one company to jump 275% in only two weeks... and another to skyrocket 170% IN A SINGLE TRADING DAY. It has nothing to do with "The Magnificent Seven" or the presidential election... and it doesn't involve trading options or bitcoin. Yet two renowned experts believe it may be the absolute biggest "no-brainer" moneymaking opportunity of 2024. [Get the full details here](. ["Gold's FINAL Bull Market Has Just Begun..."]( The last time an event this seismic played out, gold surged 2,382%... yet most Americans had no clue it was even happening. Today, a Stansberry Research Senior Partner and former Goldman Sachs VP is pulling back the curtain on this strange story playing out in the upper echelons of world finance. And even if you've never owned an ounce of gold, this could impact everything from your investments to your mortgage. [Get the time-sensitive details here](. I'm talking about stagflation. This is an environment that contains high inflation, slow economic growth, and high unemployment rates. You should view this as a technical definition – meaning that when all three occur, we have stagflation. Right now, we have one of the three: just high or persistent inflation. While inflation is down from the peak in June 2022, it has still proved to be stubbornly "sticky" in recent months. And it has still been above the Federal Reserve's target of 2%. Meanwhile, slow economic growth and high unemployment aren't showing up in the data (at least not yet). And this could explain why a rotation into these sectors is occurring early. Take a look at what happened with various exchange-traded funds ("ETFs") in March... Now, the recent performance isn't a long-term sample size. It's looking at the previous month of data, but the performance is undeniable... We've seen the sectors that institutions go to in preparation for stagflation outperform the S&P 500 and the tech-heavy funds. This is a small sample, but it reflects previous periods when stagflation was in the economy – mainly the 1970s. It was a tough investing period back then. Precious metals like gold and silver did well. And so did commodities – oil in particular. The Federal Reserve did the same thing back then as it did recently: aggressively raising interest rates to fight inflation. Now, with rates higher for longer, we may see some economic damage. Higher unemployment leads to slow economic growth. When that happens, more "defensive" sectors outperform. And I would think that when unemployment starts to rise, that's when the Fed will lower rates – not before it rises. So, putting it all together... I'm not throwing in the "investing" towel right now. We may not see a slowdown for quite some time. So this isn't a reason to dump stocks and run for the hills. But I'm acknowledging the "riptide warning." Rather than fight the riptide – the trend in the market – it may be a reason to "float" and let the trend take us to areas that are safer. I'll be closely paying attention to what happens with these trends moving forward – and if they develop into something bigger. Good investing, Pete Carmasino Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +0.05% 13 16 1 S&P 500 +0.01% 205 260 32 Nasdaq -0.19% 43 47 9 Small Caps +0.33% 589 978 340 Bonds -0.08% Energy +1.05% 3 20 0 — According to the Chaikin Power Bar, Large Cap stocks remain somewhat more Bullish than Small Cap stocks. Major indexes are all strongly bullish. * * * * Sector Tracker Sector movement over the last 5 days Utilities +2.95% Energy +1.92% Health Care +1.44% Real Estate +1.15% Materials +1.03% Financial +0.53% Staples +0.46% Industrials +0.25% Communication 0.0% Discretionary -0.24% Information Technology -0.75% * * * * Industry Focus Capital Markets Services 39 23 1 Over the past 6 months, the Capital Markets subsector (KCE) has outperformed the S&P 500 by +4.78%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #2 of 21 subsectors. Top Stocks [rating] NTRS Northern Trust Corpo [rating] EVR Evercore Inc. [rating] PWP Perella Weinberg Par * * * * Top Movers Gainers [rating] EL +6.28% [rating] AES +3.94% [rating] BXP +3.42% [rating] WBA +3.19% [rating] COF +3.03% Losers [rating] CCL -4.94% [rating] MRNA -3.64% [rating] ON -2.72% [rating] POOL -2.68% [rating] GE -2.55% * * * * Earnings Report Reporting Today Rating Before Open After Close PVH No earnings reporting today. Earnings Surprises [rating] WBA Walgreens Boots Alliance, Inc. Q2 $1.20 Beat by $0.38 [rating] MSM MSC Industrial Direct Co., Inc. Q2 $1.18 Beat by $0.02 * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2024 Chaikin Analytics, LLC. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Chaikin Analytics, LLC. 201 King Of Prussia Rd., Suite 650, Radnor, PA 19087. [www.chaikinanalytics.com.]( Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors. Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.