One of the big technical topics this week has to be the defensive groups.  Those who follow me on social media know I’ve been talking them up.  Most of the shares have been pointing out negatives and large breakdowns.  However, one defensive group is not like the others.

The Telecoms are breaking their uptrend from the 2009 lows.

iyz

The staples are breaking their uptrend from the financial crisis as well.  (hat tip to my friend Arun Chopra)

xlp

Zooming in the staples have broken down from a clear topping pattern.

xlpd

One group that is completely unlike these others is Utilities.

xlu

Why is this?  Maybe it’s because everyone is trying to mine bitcoin and electricity consumption is soaring (I think i’m joking?).  It’s more likely due to green energy and tech efficiencies finding their way to the grid.  In a sense utilities have become technology plays.

As long as the setups are there in utilities, and there are some good charts, this divergence can probably widen pretty substantially.  This draws back to a larger market theme.  Group rotation has been a theme of the year (and a hallmark of bull markets) and we really have to hone in on specific ideas to get that outperformance we’re all searching for.