Utilities finished the month of May as the best-performing market sector despite the S&P 500 and Nasdaq 100 continuing to test new all-time highs. In just the past week and I think investors are genuinely starting to position themselves a little more defensively. Junk bond momentum looks like it’s finally starting to fizzle out. The reverse yen carry trade is a very real risk and I think we may be in the very early innings of a sentiment shift.

Utilities are taking a bit of a break here, but the uptrend looks like it’s still intact for now. NVIDIA's earnings report shouldn’t be shadowing the weakness that’s apparent in many other areas of the market. Long bonds are starting to make a comeback here. If gold resumes its rebound, which it did starting last week, then risk-off sentiment is likely to persist.

Utilities took a minor breather last week amid the return of tech & growth stocks, but the momentum is far from broken. Small-cap outperformance looks like it’s stalled out amid the return of the major large-cap averages to new record highs. Treasury bonds are starting to signal risk-off behavior again, confirming what we’re seeing in utilities and lumber/gold.