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The Lead-Lag Report: Undeniably Bullish

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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.

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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.

Conclusion

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.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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