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Bill Carrigan, technical analyst, Getting Technical Info Services FOCUS: Technical Analysis Market outlook: Last week, the yield on the bellwether U.S. 10-year T-note printed a new YTD high at the 2.3 percent level – well above the January low of about 1.65 percent. U.S. equities as measured by the S&P500 responded by running up to new all-time highs, much to the surprise of many sideline investors who were anticipating a meaningful correction. The equity market - so far – believes a shift to higher interest rates is a bullish economic bellwether. This is a positive for the economy sensitive stock groups such as the financials and the technology sectors. We got more growth confirmation early this week when we learned U.S. housing starts in April jumped to their highest level in nearly seven and a half years, and permits soared. In reaction, the lumber stocks were bid higher and the SPDR S&P Homebuilders ETF (XHB) closed up – close to an all-time high. Caveat: the major negative is the disturbing use of corporate cash being used to boost earnings and share prices by engaging in share buy-backs and high dividend pay-outs. According to Goldman Sachs Group Inc. the $1 trillion that U.S. companies are on track to return to shareholders this year will constitute the market’s entire return in 2015 Strategy: Investors should move away from the consumer space such as retail, hotels restaurants, airlines & leisure and toward the economy sensitive space such as the financials, technology and the capital goods producers. Let us also see investors moving toward the economy sensitive iShares Global Infrastructure Index ETF (IGF.N) and moving away the consumer sensitive airlines and railroads (Dow Transports). Top Picks COM DEV International (CDV.TO) BMO Global Infrastructure Index ETF (ZGI.TO) CAE (CAE.TO)
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