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Does Materials and Energy sector out-performance suggest a market top?

I have learned in the past that sector rotation into Materials and Energy, where these two sectors outperform the rest of the market, suggests a market top. However, I have not seen this theme repeated at all. Recently, it was explained that these two sectors are neutral sectors - no mention of market topping sectors. I am beginning to doubt that out-performance of these two could mean a market top. Does anyone have any insight into this?

Best Answer

  • BobSBobS
    Accepted Answer
    These two sectors do generally out-perform near the top of the market. I cannot confirm that the market is topping. But there are a lot of other signs (divergences in momentum and breadth and also sentiment extremes) which point to at least a medium term top. Some would argue that because of the all-time extremes in sentiment that we are very near a long term top, but I am not ready to go that far yet.

Answers

  • Thank you Kevo for accepting my answer. Can you tell me how to do that? I would like to accept an answer in another thread.
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