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The Lead-Lag Report: Undeniably Bullish


Regardless of whether internals are improving due to central bank policy action or not, market internals remain undeniably bullish for risk assets, as new all-time highs in stocks appear ever more likely in the coming weeks.


Utilities (XLU) – Unrelenting Continuation

Comments: Utilities continue to break down, and appear to still have further to fall. This remains a positive sign for markets given the role utilities has as a "place to hide" in equities when volatility is rising and recession fears increase. The underperformance has been unrelenting.

Emerging Markets (VWO) – China Catalyst?

Comments: It appears third time may be the charm for emerging markets as a third bottom may now be in place. The group has has a hard time leading, but a spurt of strength driven by China stimulus hopes may be just the catalyst needed for sustained leadership. I maintain that the next major rotation likely in the fourth quarter is in emerging economies.


Intermarket trends remain favorable for equities, and the cyclical trade remains the most important to watch. The next rotation likely is in emerging markets, financials, and anything most sensitive to rising inflation expectations, which appear to be forced upon us by SuperBen and the League of Extraordinary Bankers.

Editor's note: This update is published every week exclusively for Minyanville, and is compiled by Michael A. Gayed, CFA, Chief Investment Strategist of Pension Partners, LLC.

Twitter: @pensionpartners
No positions in stocks mentioned.

This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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