Will interest sensitive stocks continue to rally?

October 21, 20132 Comments

TLT SHORT

The 20-yr US long bond is, unsurprisingly, staging an oversold comeback. Following that strength, interest sensitive stocks like utilities, pipelines and REIT’s are bouncing. If you’ve been following this blog or watching my BNN appearances, I emphasized that potential a couple of months ago. The question is, will these sectors continue to rally?

xre

My take is that it’s a short-termed trend that might continue to have legs for another month or two. While the charts for Canadian utilities (left chart – below- breaking a downtrend) and US utilities (right chart- below- breaking out of a triangle) are bullish, momentum indicators are overbought for these sectors.  Canadian REIT’s, in the above chart along with the US long bond on the top chart, are running into some near termed resistance. Further, comparative relative strength, which is the bottom pane on charts I’ve posted, is only marginally strong for all of these charts. So, enjoy the rally, but look to rotate out of the least desirable sectors if and when the party looks to be ending.

zut short

xlu

 

 

 

 

 

 

 

Keith on BNN

Lots of heads-up on this one–I’ll be on MarketCall Tonight on Tuesday November 5th at 6:00pm. That’s about 2 weeks from now.

2 Comments

  • so are you suggesting ZUT which you may own should be sold in the coming months, expectedly before YE?
    Thanks

    Reply
    • Hi Daddyo–I do still own ZUT. My buy recommendation on the blog was about $15–that support level was broken as you know, so it now becomes resistance. Thus, $15.00 – $15.20 is my target–not so much a time target, but a price target. Meanwhile, it pays a decent dividend (5%) so no skin off my back to wait–the chart does look encouraging for a continuation of the current movement for a little while.

      Reply

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