Financials Lag As Transports Lead

This is an abridged version of our Daily Report.

Stalling Financials trigger concern

Even as the S&P tickles a new high, Financials have struggled and are the worst-performing major sector over the past six months. The ratio between Financials to the S&P just hit a new 52-week low, which has been a warning sign, with negative returns over the next two months every time since 1999.

A Transportation myth

Investors believe a breakout in Transports leads to an imminent new high in the Dow Industrials. That hasn’t been the case, at least during the next month, as their record as a leading indicator is poor.

Renewed interest in boring stocks

A few months after being the most-hated sector in a year, interest in Consumer Staples is heating up. The XLP fund took in more than $350 million on Wednesday alone, the most among all sector funds.

A boost in Thai optimism

Among all country ETFs, the Thailand fund, THD, is highest, above 80. While such optimism is usually at least a short-term contrary indicator, when the fund has been below its 200-day average, readings above 80 have led to positive returns over the next year 100% of the time according to the Backtest Engine.