Utilities went parabolic last week relative to the S&P 500, but that continues a short-term pattern of whipsaws back and forth. I’ve been talking about the risk of deflation for a while and I think this could be an early sign that sentiment is shifting in this direction. Tech stocks are trying to make something happen here, but there’s just not a lot of momentum for growth or high beta stocks.

Crude oil and natural gas prices remain very volatile and it seems like anything between $90 and $150 a barrel is in play. The strongest sector at the moment is materials, fueled by rising prices in everything from steel to copper to aluminum. The gentle uptrend in industrials remains intact for now, but this sector is still struggling to generate the momentum of its cyclical counterparts.

Oil prices are well off of their highs and it’s easy to think that a downturn was long overdue. REITs are often considered a bad investment in rising rate environments, but we haven’t seen any evidence of underperformance lately. Higher interest rates helped fuel a good week for the banks, but the outlook appears to be questionable.