After Thursday's big surge by the bulls, the bears couldn’t even get a pullback on Friday. Early weakness was quickly bought and I joined that party at the open. Very quietly banks and financials are climbing the ladder of leadership as long-term bond yields are trying to break out to the upside. That’s probably the biggest and perhaps most important story in the short term. It’s a return to the “reopening trade” or economically sensitive sectors.

The 10-Year Treasury Note is below. I am going to oversimplify and say that when yields are rising and between 1.4% and 1.75%, value is preferred overgrowth and cyclical sectors over defensive. When yields are between 1.4% and 1.15% and not rising, growth is chosen overvalue and tech with defensive sectors are favored.

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Furthermore, when long-term bond yields as measured by the 10-year Treasury Note fall, the market is focused on slowing growth, but not necessarily slow growth or negative growth. In that environment growth sectors, like technology are very much favored. When the opposite occurs, sectors that do well when the economy is growing fast are favored. Those would be financials, materials, industrials, and energy.

Last Thursday and Friday you can see that bond yields broke out to the upside and energy and financials really took off. That trend looks young and could or should be the new theme for the short-term and perhaps, right into year-end.

To the close of the week, I sold large cap value and bought mid cap value to round out that strategy which already has small cap value and the NASDAQ 100. I also bought more REITs to round out our sector portfolio which is a mish-mash of technology sub-sectors, healthcare, and industrials.