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New Sector Leader, Old Leaders Still Near the Head of the Pack

It was a wild week last week on the sector front, with some new contestants starting to jockey for leaedership roles (and some of them are even making progress to that end).

Utilities and telecom are still out on front, though utilities stocks eased back a bit later in the week, allowing telecom to move ahead for the last three months. Both were and still are ‘must haves’, however, so the shake-up is a little irrelevant.

At the bottom of the pile you’ll find energy is still at the bottom. Though it remains a laggard, our contention remains that these stocks - selectively - are also tremendous opportunities right now.

The most noteworthy (and actionable) leadership switch-up came from the sectors in the middle of the pack. Basic materials, which had been weak coming out of the April/May pullback, saw big progress last week that pushed it ahead of a few other arenas. Yet, the group still has room to move. Coupled with its new momentum, the materials stocks are also quickly becoming ‘must haves’.

Not that one week makes or breaks a trend, but it should be noted that the current performance ranking started to materialize in early June when the market first started to offer a glimmer of rebound hopes. So what? There are two points to make……(1) such trends do persist, and (2) they can be identified, if you just look for them.

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James Brumley is a freelance writer and registered investment advisor. He began his career as a broker with a major Wall Street firm, where fundamentals and long-term holding periods were core strategies. After that, he switched gears completely, becoming an analyst at a short-term trading newsletter that focused on technical analysis. He now manages client money using the best of both philosophies. His company, Bluegrass Portfolio Management, offers investors an opportunity to reap superior returns with minimized risk.