More Ways to Fall in Love

Just a quick follow-up into the bell today with our working thesis that energy stocks and materials are putting in a long-term bottom: We have crude oil lower on global demand concerns (or at least that is the reason provided by CNBC). 

However, energy stocks themselves are higher, with the OIH ETF (oil service and equipment stocks) up 3.5% as I write this. When we see this type of divergence it should raise some eyebrows, as energy stocks would typically be slaughtered on those days with crude flashing red over the last few quarters. 

Not so today, though, as the sector tries to prove that sellers may be dried up. We never want to fall in love with a market sector or thesis. But we have more reasons to believe energy stocks are actually improving. 

As for the market at-large, sector rotation was the theme of today alongside the small cap strength. Bulls will need to see this theme persist especially as many software names are still red as I write this and unable to bounce even after recent heavy selling.