The Lead-Lag Report: Markets Hesitate
Market internals appear to be hesitating following bullish behavior post QE3. More time is needed, but for the first time in several months signs of deterioration are occurring.
Make up your mind to act decidedly and take the consequences. No good is ever done in this world by hesitation.
-- Thomas Huxley
Below is an assessment of the performance of some of the most important sectors and asset classes relative to each other, with an interpretation of what underlying market dynamics may be signaling about the future direction of risk-taking by investors. The below charts are all price ratios which show the underlying trend of the numerator relative to the denominator. A rising price ratio means the numerator is outperforming (up more/down less) the denominator.
For a full version of the Lead-Lag Report, click here.
LEADERS: ALL ABOUT TIPS AGAIN
Financials (NYSEARCA:XLF) – Intact
Comments: Financials strongly outperformed on the Fed's QE3 announcement of unlimited stimulus to counter stubbornly high joblessness. Targeting mortgage backed securities while at the same time not going after longer-duration Treasuries appears to be a net positive for banks as the yield curve steepens. The trend remains intact.
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