On February 27, some technical analysts were expecting a pause in the US market. It took place and may have ended already on March 8 as the ratio of Cyclicals versus Defensive sectors in the US is turning up again. Indeed the Discretionary Sector is at a higher high and is re-accelerating up. During the sharp correction, early March, the relative strength of Defensive sectors failed to resume an uptrend, like, for staples and healthcare, but the Bond market has a strange message: the yield of US 10 year is testing key support at 2.60. Is this worry about Equity or complacency about the FED Probably none, as US 10 year yield may soon rebound to remain in a wide range. The US dollar Index is long term Bull but came quickly down from the top of its range to “rescue” US Equity from March 8 on. Remaining in its range is also most likely in the coming weeks. This credit needs to be given to the December 2018 low, which could well be the four-year cycle low, thus like after the 1998 four year low, the following year had a Bull bias. But to have a Bull bias does not mean going up in a straight line as we experienced in the first 2 months of 2019. Thus watch your charts, Bruno Estier, Independent Market Strategist.
On February 27, some technical analysts were expecting a pause in the US market. It took place and may have ended already on March 8 as the ratio of Cyclicals versus Defensive sectors in the US is turning up again. Indeed the Discretionary Sector is at a higher high and is re-accelerating up. During the sharp correction, early March, the relative strength of Defensive sectors failed to resume an uptrend, like, for staples and healthcare, but the Bond market has a strange message: the yield of US 10 year is testing key support at 2.60. Is this worry about Equity or complacency about the FED Probably none, as US 10 year yield may soon rebound to remain in a wide range. The US dollar Index is long term Bull but came quickly down from the top of its range to “rescue” US Equity from March 8 on. Remaining in its range is also most likely in the coming weeks. This credit needs to be given to the December 2018 low, which could well be the four-year cycle low, thus like after the 1998 four year low, the following year had a Bull bias. But to have a Bull bias does not mean going up in a straight line as we experienced in the first 2 months of 2019. Thus watch your charts, Bruno Estier, Independent Market Strategist.
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