After trading with a positive bias overnight, US equity futures have turned lower and are now indicated to open flat to slightly lower. Given the light flow of news and data that is typical of year-end, there isn’t much of a catalyst driving the reversal, although Samsung did announce that it would be adjusting production schedules in China due to an outbreak of the Omicron virus in the Xi’an province. Any indications of further disruptions to the supply chain because of rising COVID cases would be viewed negatively at the margin by the market even if they are only temporary.

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The S&P 500 is up just under 5% over the last five trading days, and the rally has been led by Consumer Discretionary (thanks mostly to Tesla) and Technology which are both up over 6%. Other sectors that have outperformed the broader market include Energy (+5.75%), Materials (+5.25%), and Industrials (+5.11%). On the downside, four sectors are up less than 4% over the last five trading days, and ironically enough, they are also the only sectors trading more than two standard deviations above their 50-day moving averages as they outperformed the market during the weakness that preceded this latest rally. Even after the big Christmas rally and the fact that the S&P 500 is right near record highs, two sectors – Energy and Financials – are still below their 50-day moving averages while Communication Services is just barely above its 50-day.