Friday, August 07, 2009

Midday Briefing for August 7th: Shifting Themes

With strong jobs data, we've seen the dollar rally sharply against the euro and stocks rally strongly to new bull highs, led by the financial sector.

Note the inversion of recent themes: here we're seeing strong stock prices on the heels of a strong dollar and weak commodities. Note also the continued relative underperformance of the NASDAQ 100 stocks, as well as commodity-sensitive energy and materials shares. Indeed, the new highs in the S&P 500 Index (ES, above) are not confirmed by several sectors, including XLP, XLV, XLE, XLB, and XLK.

I will be watching closely to see if we can sustain the current strength--and also to see if we're seeing the start of shifting intermarket themes.