Over the past week and a half, utilities has trailed the S&P 500 by around 4% and could be signaling a short-term sentiment reversal. Small-caps aren’t providing much of a signal as to what current market sentiment is. It looks like the time of Treasuries behaving like a risk-off asset might have faded again.

Utilities took a step back last week during the big bear market rally, but the trend is far from broken. The bond market usually gets it right and I think it’s telling us risk-off isn’t done. Tech looks like it may have stopped the bleeding on underperforming the market, but there’s still a lot of volatility with little progress. Much of the lumber price excess may have been worked out, but I don’t necessarily think another rally is in order.

Crude oil prices continue to head higher heading into the big summer travel season and that’s been enough to cement the energy sector’s status as market leader. Energy has gotten a lot of the attention, but materials remains one of the most durable sectors since the COVID market bottom. The utilities sector maintains its firm hold on market leadership.