Investors Rotate to Cyclical Stocks to Extend this Bull Market

Investors Rotate to Cyclical Stocks to Extend this Bull Market

$DIA, $SPY, $QQQ, $RUTX, $VXX

FLASH: This Bull market has more room to Run, retail investors still on the sidelines.

As investors bet on strong returns in cyclical sectors, they are also confident that US stocks at large will continue their historic Bull run.

That run could be extended, we believe, as investors who remain on the sidelines put more money into stocks. Despite this year’s gains, retail investors have largely poured money into bond funds not stock funds.

US-based equity mutual funds posted $3.64-B of cash withdrawals in the week ended 24 April, extending their weekly outflows since mid-February, according to Lipper.

On the other hand, bond funds, which include taxable and municipal debt funds, brought in a net $8.8-B last week to continue a streak of positive inflows over every full week of the year to date.

That trend could reverse as the strengthening economy increases investors’ appetite for riskier assets, BlackRock CEO Larry Fink told Reuters in a recent interview.

Shayne and I believe we have the economic tailwinds to say we are going to probably break through the overhead resistance at the September highs. To the extent the economy does grow at a faster pace the rest of the year, that will broaden the rally going forward.

Further, the financials, a Key cyclical sector, have not had the same resurgence as tech and industrials this year, and we believe that economic conditions should soon boost those bank as well.

Thursday, the major US stock market indexes finished at: DJIA -122.35 at 26307.79, NAS -12.87 at 8036.76, S&P 500-6.21 at 2917.52

Volume: Trade on the NYSE came in at 838-M/shares exchanged

  • NAS Comp +21.1% YTD
  • Russell 2000 +17.4% YTD
  • S&P 500 +16.4% YTD
  • DJIA +12.8% YTD

HeffX-LTN’s overall technical outlook for the major US stock indexes is Bullish in here.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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