Is This Real Rotation Into Laggards?

By JC Parets

May 28, 2020
JC Parets profile image

This is a special weekend. The close on Friday marks the end of the day, week and month. That means we have a fresh batch of weekly AND monthly charts waiting for us. This process provides a lot of information because, by stepping back, it forces us to identify the direction of the primary trend.

In the meantime, a few shorter-term charts caught my attention. Both have been horrendous laggards in this market: Regional Banks and Industrials. My question here is whether or not we're seeing a changing of the guard?

Here are Regional Banks relative to the S&P500 putting in what appears like a fairly clean double bottom. Momentum putting in a bullish divergence is a nice touch:

Check out Industrials. In this case, we saw lower lows relative, but again, that bullish momentum divergence showing up:

There's something funky going on here. It's what's necessary for a sustainable bull market, in my opinion, and not the isolated leadership we've seen so far. These are, in my opinoon, 2 of the 3 most important sectors in America, with Technology being the other.

What are you thoughts? I'd love to hear them.

JC

 

Have you seen our new Charting School? Check it out!

Filed Under:
JC Parets profile image

JC Parets

Founder, TrendLabs

JC Parets, who holds a Chartered Market Technician (CMT) designation, is the founder of All Star Charts and is one of the most widely followed Technical Analysts in the world. All Star Charts is a research platform for both professional and retail investors covering US and International stocks, interest rates, commodities, and forex markets.

JC_ParetsX