Sector Ratings and Model Portfolio Update - 2/1/2024
The Grindstone Intelligence Sector Ratings are based on our top-down technical approach. We assess the relative strength and trends within each sector and gauge risk appetite in the broader market to determine which sectors we think are best positioned to lead going forward. The ratings below reflect our views over the coming month.
The US Equity Model Portfolio is a hypothetical allocation designed to align with our Sector Ratings. The positions are chosen with investment horizons ranging from one to several months. The Model chooses only funds that track sectors, industries, or categories of stocks - no individual stocks or cash positions are used.
Guess which sector is front-running the market again in 2024? That’s right, it’s Tech. Just over a year ago, the Information Technology sector was breaking down to new multi-year lows relative to the S&P 500. Then a failed breakdown sparked a rally that pushed Tech above 22-year resistance from the dotcom bubble highs:
We aren’t betting against Tech, but a few other sectors have caught our eye. Over the last 6 months, the Financials have been nearly as good:
Check out this big rounded bottom the Financials are trying to complete relative to the S&P 500 index.
And right now, no sector has more stocks in technical uptrends. 96% of large cap Financials are above their 200-day moving average.
After the March 2023 banking crisis knocked this group down a peg, they’ve still got quite a bit of catching up to do. We’re keeping our Overweight rating on the Financials.