Today is Election Day in the U.S., and while the spotlight is on the political arena, this is the perfect time to ignore the noise and focus on what really matters.
When it comes to seasonality, some of the best signals that we get are when the market does not follow the historical pattern or seasonal trend.
The chart below shows the S&P 500's average monthly returns during election years.
Consumer Discretionary stocks are a reliable gauge of risk appetite and market health.
Consider these as automobiles, retail, and homebuilding—industries that offer products and services consumers purchase with their discretionary income.
When investors favor these stocks, it indicates a higher level of risk-seeking behavior.
One simple way to assess them is by comparing their performance to the broader market.
The chart below illustrates Large Cap Consumer Discretionary Sector relative to the S&P 500, potentially forming a major 10-year top.
Typically, a strong dollar would suggest a defensive tone for risk assets. But not this time.
Despite the dollar's impressive run, equities are holding their ground and showing serious resilience. Just last week, the S&P 500 closed at all-time highs.
And when you dig into the chart, DXY is still stuck in the middle of a range
When I think about the strongest stocks, I’m not just looking for outperformance across different timeframes. The strongest stocks should be back to our through their old bull market highs.
Let’s discuss the materials sector in this light.
The bubble chart below shows the change from the 2021-2022 highs on the Y axis and the 3-month relative change on the X axis. I'm graphing all the materials industry groups to see how they stack up.
