We are just about halfway through the first quarter of the year and all the major US equity indexes are within reach of their all time highs. The US dollar stalled just where we expected it to and is starting to show some signs of short term weakness. The commentary about there only being a couple of stocks leading the market higher continues despite market breadth expanding and investor sentiment remains remarkably low. We believe that these are the main points of discussion around where the market is heading in the near term and continue to look for strategies that take advantage of these ongoing trends.
The one main disconnect we have seen in recent months is the weakness in the Energy sector. After rallying to start the year, the sector has since calmed down to perform in line with the S&P 500 despite commodities surging. Given how quickly rates have risen since the start of the year, we expected Energy to follow suit and are keeping a close eye on what happens in the coming weeks between these two areas of the market which are generally highly correlated. Whether rates begin to come down, oil prices start to rise, or the current disconnect continues, each scenario will provide us with valuable information as we continue to navigate this challenging market environment.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The content is developed from sources believed to be providing accurate information.
The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.