The combination of an economy that’s still sustaining and a tight labor market is keeping short-term conditions in favor of select cyclical sectors. Commodity prices are weakening from pandemic era highs, but commodities producers are still doing well. Utilities have been picking up strength for two months, providing one of the strongest risk-off signals in this market.

Industrials remain one of the best-performing sectors of 2022, but this could also be a case of it just being a matter of time. The story with the materials sector is similar to that of industrials. The utilities sector continues to pick steam along with most other areas of the market.

The Treasury rally has taken a bit of a breather, but this week will clearly be a big one for it. Energy stock prices are finally starting to catch up to the decline in oil prices and I suspect there’s more room to go. The outlook for tech still doesn’t look good and may not for another few months. We may be nearing an important inflection point for small-caps right now.