The tech sector has rebounded in a big way from this ratio’s low earlier this year. It’s been a bit of a struggle, but the discretionary sector looks like it’s trying to outperform here. The S&P 500 has outperformed the utilities sector over the past couple weeks, but this feels a bit like a false flag signal.

Last week I noted that “this could be a signal that the recent tech slump was overdone and could be looking to make up some ground”. Interest rates have remained roughly flat over the past few weeks, which has kept banks and financials from pushing higher and extending their recent rally. The materials sector pulled back along with other cyclical sectors, although the fundamental background still looks favorable.

Utilities is having its best run relative to the S&P 500 since the 2nd half of last year. The dollar strengthens to 5-month highs as Treasury yields stabilize and investors show preference for less riskier assets. The recent tech slump could be overdone and looking to make up some ground here. I’m still of the belief that things have gotten a little out of whack in the government bond market and Treasuries could be due for a rally here.