Utilities Tumble as Bond Yields jump

Utilities have another terrible day dropping more than 2%. Telecom and Real Estate weren’t too far behind utilities. Bond yields jump again and now we are seeing interest rate sensitive sectors falling with anticipation of higher rates. Stocks fell on the session as volume increased day-over-day. We did see a late day push higher, but we still see some troubling signs and we’ll need to add some protection. A lot of positioning is taking place ahead of Friday’s job report and all indications are pointing to a negative reaction. Not a great day for the market and with interest rate sensitive stocks are moving like we are going to see rate hikes sooner than December.

On the positive side Banks are acting well. They desperately need higher rates to pull themselves out of trouble. Higher the rates go the better of the banks will be. It is hard to making any money off the spread when Fed Funds are so low. It actually baffles the mind when you begin to think about negative interest rates. How do banks money when negative rates exist? It is quite fascinating the implications we may see as a result of our massive monetary experiment. Whether good or bad we will continue to grind out solid gains from our portfolios.

Earnings season is around the corner and you must be aware and be prepared. Nothing like getting caught off guard during earnings season. Proper position sizes as well as proper exits will keep you from suffering a widow maker of a loss. Adhere to the rules and do not under no circumstance think you are somehow better than the system.

Now that we see utilities fall from the sky and banks moving higher this market is looking for the jobs data to force the Federal Reserve’s hand in raising interest rates. It will be fun to see the reaction out of the market!

Continue to grind and always cut those losses short!