While the S&P 500 Index ($SPX; top chart) is still below its bull highs, shares in Europe, the Far East, and Australasia (EFA; middle chart) and in emerging markets (EEM; bottom chart) registered new bull highs yesterday.
Even within the U.S. market, we're seeing interesting disparities. Consumer Staples shares (XLP) made a bull high yesterday, while the Dow 30 Industrials (DIA), Health Care (XLV), and Materials (XLB) stocks are quite close to their bull highs. Banking stocks ($BKX), however, are more than 10% off their bull highs, and we are well off highs among the NASDAQ 100 Index stocks (QQQQ) and the Russell 2000 shares (IWM).
Should we get new bull highs in the Dow Industrials which are not confirmed by the more growth-oriented indexes (QQQQ, IWM) and sectors (XLY, XLK), with lagging financials, I would be looking for evidence of reversal. Conversely, continued bull highs among overseas markets, with renewed interest in those growth sectors, would keep me leaning to the long side.
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