Something major has happened in the last few months.

That something is the fact that market leadership has shifted significantly away from tech.

Throughout 2020, the technology sector of the market (“tech” for short) was THE leader for stocks. It wasn’t even close!

However, in the last few months, all of this has changed.

Take a look at the tech-to-financials ratio. When tech outperforms financials, this ratio rallies. When tech underperforms financials, this ratio falls.

This ratio now looks extremely bearish with a rounded top in place and important support levels (red line) being taken out. This would mean the markets have moved into a period in which financials outperform tech dramatically.

Financials are not the only new market leader… take a look at the tech-to-energy ratio!

When tech outperforms energy, this ratio rallies. When tech underperforms energy, it falls.

The tech-to-energy ratio shows a bearish breakdown, with the ratio slicing through one line of support (top red line) and preparing to break through the second more critical one (lower red line). This means the markets have entered a period in which energy dramatically outperforms tech.

So both energy and financials are now outperforming tech by a wide margin!

I’ll dig deeper into this tomorrow. Until then…

Best Regards,

Graham Summers
Editor, Money & Crisis