Energy has collapsed, giving up 6% so far this quarter, while Healthcare is up 7%. Year-to-date, now, Healthcare has surpassed Energy, which is in second place at a not-too-shabby 9.9% compared to Health at about 12.6%. It's worse for Small-Cap Energy, which is down 12% QTD. In early April, I had first warned of my concerns about Energy, suggesting conservative investors move to Large-Cap Technology, which is up about 2% QTD. More recently, I shared my expectation for a 10% correction in Energy. I think we will hit the objective I shared in coming days.
I think that this action is extremely positive for the market, but I recognize that the short-term implications can be negative. Last October, I shared my forecast for 2011, suggesting 1500 on the S&P 500 was in the cards. We are essentially on track, with the S&P 500 up about 7%, 1/3 of the way through the year. Rising energy prices and other commodity prices stand out to me as a real impediment to my forecast being achieved, as they could destroy demand or lead the Fed to be more aggressive with interest-rate policy than would be otherwise warranted.
Comments