New Members: Be sure to confirm your email address by clicking on the link that was sent to your email inbox. You will not be able to post messages until you click that link.

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

Kevo
Kevo ✭
in Using Technical Analysis
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

  • BobS
    BobS ✭
    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

  • BobS
    BobS ✭
    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.

Categories