Last week, there was massive and broad-based technical damage done to many interest rate sensitive stocks.  I saw a bunch of 5% to 10% declines in individual stocks while the associated ETFs had only minor moves.  This divergence is very troubling.

I rarely comment on things like this unless a situation is so dramatic that it biases my signal work. As I go through the technicals and can recognize what industry a stock is in solely because of a familiar chart pattern, it’s very rare and it’s worth mentioning. By the end, it becomes a game for me to see how many I can guess correctly before even looking at their symbol.

But losing money is no fun and it’s not a game, so please pay special attention to the banks, REITs and Utilities. I was a bit surprised to see the weakness given the Fed’s reduction to rates and the market’s supposed belief that they are committed to more cuts.  The media keeps suggesting that the financials have bottomed and there is an abundance of investment managers who support that view.  However, last week’s action was highly inconsistent with optimism for financials and I strongly recommend that you pay close attention to what is happening rather than what people want to happen.