The markets have been red hot lately which has sent many sector ETF's running for highs as well. The S&P 500 (SPY ) has been all green since the start of the year boasting almost a 3% gain, and it's still January folks! The trend in the short term is arguably extended and many are expecting a cooling off period. Long term there is no arguing the trend is strong and consistent to the upside.
The Nasdaq 100 (QQQ ) is in the same position but with slightly better gains. Almost 4% since the start of the new year and showing no signs of weakness. Short term it too is extended and many technical traders would prefer a short term pullback but the markets have not accommodated.
Metals and Mining stocks (XME ) have been strong sending the XME to new highs on Wednesday. Since early November the sector has been incredibly strong making new highs seemingly every day. For now the trend is strong but also remains quite extended in the short term. Technical traders would be eagerly awaiting a dip to buy. Since November the XME is up over 25%.
Financials (XLF ) continued their breakout this week, adding another 1.5%. With consistent volume pressure to the upside, there has been almost no fear of any kind of retreat. Since breaking out last week the XLF is now higher by 2.15%. Longer term the trend remains higher as investors believe that higher interest rates in 2018 will continue to fuel banks profits.
Oil (USO ) continues its power trend higher, hitting new highs each day this week so far. Going back to the breakout in December, the USO is now higher almost 8% in an almost vertical move higher. This has also helped the oil service space (XOP ) which has also enjoyed a healthy rally in the short term.
Mexico (EWW ) continues to under perform thanks to tax reform. Since the official passage of the bill the EWW has struggled to find investors now that the US is more competitive on a global scale. In the short term many are content to put money to work elsewhere.