What an amazing session. While it’s true, major indices have traded in a narrow range, the fact they held up sends an amazing signal, that at least for now, the wild gyrations and major swoons are overdone.

At one point, all the major equity indices were getting slammed after Jay Powell pulled the rug on banks and a possible extension of SLR exemption. That news sent the ten-year yield rocketing higher, but something strange happened.  Instead of value moving higher, and growth moving lower the tables turned.  Energy is rebounding even though crude remains under pressure. The standout sector has been Communication Services, led by Facebook (FB) and a mix of old media, video games and streaming video.   

Meanwhile, Financials are taking it on the chin, in part to that Fed news, but also because influence analyst Tony Dwyer, Chief Market Strategist as Canaccord, downgraded the banks.  It really is interesting considering how crowded the trade had become.  I cannot wait to see what happens on the street where there is very little independent thinking.  You can bet there will be copycat downgrades and more folks getting cautious.

Stocks levered to the consumer are rocking. Etsy (ETSY) acts great, and was oversold, as does Best Buy (BBY) and Dollar General (DG).

Not Technology

Communication Service (XLC) is nearing its all-time high and has caught up with the 52-week performance of Technology, which is under pressure.  Of course, many market watchers cobble all these names together under the heading of Technology, but I agree with S&P that there is a major difference in a company that makes technology solutions and those that use those solutions to create services.

Tested

Rallies must be tested, and the last five weeks have provided great test,, including climbing off the canvass today.

Have a great weekend and be safe.