In Like a Bear, Out Like a Bull

It’s the last day of the quarter and investors around the world are looking to end it on a bullish note.  With the S&P 500 on pace for its best first quarter of the year since 1998, it may be hard to remember that the year didn’t start out on nearly that optimistic of a note.  In fact, after a big decline of over 2% on the second trading day of 2019 (thanks to an Apple warning), the S&P 500 was off to its worst start of a year since 2000 and just the fifth year in its history that it was down more than 2% two trading days into the year.  For all the strength in equities this quarter, though, they haven’t held a candle to crude oil which is up over 30% this year for its best quarter since Q2 2009!

We highlighted the massive relative performance gap between the Technology sector and the Transports in last week’s Bespoke Report, and if you are a fan of Dow Theory, the underperformance of the Transports has been a source for concern.  This week, the Transports put a small dent, or better yet, scratch into that streak of underperformance.

The chart below shows the relative strength of the Technology sector and the Transports relative to the S&P 500 (rising lines indicate outperformance versus the S&P 500).  Beginning in late January, the two really started to diverge from each other, but this week have started to close what has been, and still is, an enormous gap between the two.