Commodities close the gap on International Equities in the asset class ranking, and Energy overtakes Technology in the Domestic Equity sector breakdown.

There have been a number of notable developments within the DALI rankings over the course of the past week, so we’ll start with the broad asset class rankings. One of the big stories we have continued to watch this year has been the improvement of Commodities after moving into the third position at the end of 2020. So far this year, Commodity has added a net of 82 buy signals, bringing the tally signal count up to 242, now just nine signals away from the second-ranked asset class of International Equity. However, what is perhaps more noteworthy is the fact that the current signal count of 242 for Commodity is the highest reading we’ve seen for this asset in nearly 10 years! The last time the tally count for Commodity was this high was back in the late-2011 time period, which was a period where Crude Oil prices spent a majority of the time in the upper $80’s to lower $100’s. The improvement for Commodity over the past few months has primarily come at the expense of the more defensive asset classes, namely Fixed Income and Cash. As we have seen interest rates rise recently, that has negatively impacted bond prices and has pushed the tally reading for Fixed Income down to 251, which is the lowest reading Fixed Income has seen in nearly 10 years! So, as the Commodity asset class has emerged as a leader in this market, Fixed Income has fallen to multi-year lows in terms of the relative strength picture within DALI. 

The strength in the Commodity market has also spilled over into the commodity-related equities to the extent that the Energy sector is now the number two ranked sector within the DALI sector rankings as Technology has slipped to number three. Technology would still be viewed as a leadership group, however, the move down to number three is the first time the sector has not been ranked within the top two since October 2016. So, while sectors like Energy and Consumer Discretionary have been moving up the ranking, Technology has been weakening. Again, Technology has not fallen out of what we consider to be a leadership position, but it is one that you will want to monitor exposure in for any further deterioration.