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The image below comes from the Sector Carpet. First, notice that all sectors are lower. Second, notice that the Basic Materials SPDR (XLB), Energy SPDR (XLE) and Technology SPDR (XLK) have the most red. The Consumer Discretionary SPDR (XLY) is not far behind. Third, notice that the defensive sectors (XLU, XLP, XLV) are holding up the best because they have the smallest losses.
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The German DAX Index peaked around 7200 in mid March and moved below 6000 in early June. That’s over 15% in less than three months. Despite looking oversold, there are no signs of a reversl as the index remains below its late May high. In the indicator window, the Price Relative ($DAX:$SPX ratio) continues to trend lower as the DAX underperforms the S&P 500.
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The PerfChart below shows the performance for ten currencies since January (year-to-date). The traditional safe-haven currencies are down (Dollar and Yen), while two emerging market currencies are up (Real and Peso). The Euro is also up, which reflects the current risk-on environment for the stock market.
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The Lumber Continuous Futures ($LUMBER) remains in a clear uptrend with a series of higher highs and higher lows since late June. This advance (roughly) corresponds with an advance in the Home Construction iShares (ITB). ITB was a little shakey in October-November, but the etf has been moving higher since late August. Rising lumber prices suggest rising demand which should bode well for housing starts.
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From the pre-defined scans page, the number of new 52-week highs continues to outpace the number of new 52-week lows. This is true for the Nasdaq, NYSE, Amex, TSE and CDNX. The latter two are Canadian exchanges. New highs are a show of strength, not weakness.
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The risk-on trade remains alive and well in October. As the Perfchart below shows, stocks, oil and gold are strong, while bonds and the Dollar are weak. The relationships reflect a market that is embracing risk. Strength in the Dollar and bonds would start to suggest otherwise.
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