Scattered Thoughts
Old Era stocks finally break above downtrend, gas prices imply a Fed cut, a weaker dollar to replace tariffs, lower commodity prices usually bad for stocks, a political coincidence, and more!
Just some scattered thoughts this morning – some may say “scatterbrained”! Hopefully there are a few nuggets among these random ideas.
1. Old Era stocks FINALLY break Trendline!
As demonstrated in chart 1, it took 15 years, but the relative price of S&P 500 Old Era stocks (a market cap weighted index comprised by the “other” 9 sectors of the S&P 500 index excluding the information technology and communications services sectors) has finally broken above its downward trending trendline. S&P 500 Old Era stocks have been chronic underperformers within the S&P 500 index since 2011. Will this breakout prove to be a significant marker of a “change in leadership” from New Era to Old Era stocks? And, if so, how long could the new leadership last? Once Old Era stocks relative price broke higher in late-2000, they persistently outpaced the overall S&P 500 index for more than a decade. This probably won’t happen again, but my guess is this upside breach will prove to be significant.
