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Industrials Equal-weight to SPX breaking out as Airlines soar

Headed into mid-day, we see most of Europe managing to close higher by ~1%, with Germany and Italy showing outperformance while German Bund yields extend recent gains as the Global Bond selloff continues (Yields rising around the globe)   S&P is arguably trying to exceed important resistance highs of its 3-week consolidation, while NDX has advanced back to new All-time high territory, with NASDAQ comp on the brink, just below late Sept highs.  Energy continuing to demonstrate solid strength, while Tech and Financials are also higher by more than 0.70% and Staples the only losing sector on the day.  Industrials meanwhile, breaking back out to new monthly highs relative to SPX as Airlines start to show very good strength and Transports further their own recent breakout.   Key to view this Industrials move in more equal-weighted terms as the XLI looks nowhere near as bullish as RGI, the Guggenheim Equal-weighted ETF and specifically XLI has been LOWER by 10% over the last 3 months, so this serves to mask some of the real strength in this sector

Breadth decent at 3/1 positive while volume is flowing at a bit higher clip in “UP” vs “DOWN” stocks.  To reiterate points from today’s Weekly-  Despite breadth having slowed of late, much of this is simply due to the flattening out itself of this trend since July and more recently since mid-September, while the intermediate-term uptrend remains very much intact.  The bullish sector rotation happening with strong price action in sectors that MATTER, like Technology, Financials, Energy has made a bullish stance imperative, despite a seemingly dull lifeless market.  The US Dollar is continuing to gain ground today vs both Yen, Pound Sterling but is having little to no negative effects on Energy, as Crude has pushed back to new multi-week highs, and higher by nearly 3% today, just below former peaks from mid-August.   For those that watched last night’s US Debate, the feeling of dissatisfaction, anger, frustration gives you all you need to know about sentiment these days and continues to be a reason to think equities largely still go higher given this ugly dark cloud of social unrest and global bearishness.   

BOTTOM LINE FOR S&P-  Bullish stance still recommended.  Today’s new multi-day intra-day highs and multi-day high close might not be enough to jump-start this market above the recent consolidation, but it’s a step in the right direction for Bulls with Financials strengthening further while industrials breakout to join the recent Tech strength-  OVER 2168 in S&P December futures might be needed before true acceleration up to 2200, 2215-20 can happen, but for now, it’s tough to sell into this move simply given that its approached the highs of the recent trading range-  UNDER 2132 necessary at a minimum for any type of concern about a selloff, which for now, seems very much premature.

Equal-weight Industrials Sector vs SPX breaking out as Airlines and Transports are helping the broader Industrials space further this breakout