NEW YORK (Reuters) - the big money calls put an end to the boom in actions.
Oil and metal prices decline is seen by a growing number of managers of funds and strategists as a signal out of riskier equity market areas. And that means avoiding things like Chinese industrial property offices and sticking the boring stuff, like utilities.
The growing concern that stocks had priced in an overly optimistic economic course and the recent degradation goods and travel, in actions to safer industries as health care suggest taking into account in the coming months.
Ken Fisher, founder of investment of Fisher that handles approximately 38 billion dollars in shares. is among those concerned that many investors is become too confident.
"I think that the expectations for the stock markets are a little on the high side," he said.
The theory that the economy may be slowing will be tested this week with the publication of two regional manufacturing reports in the areas of New York and Philadelphia. They are a precursor of the larger national surveys of ISM published early next month.
However, some say there is room for the market to go before taking a turn for the worse.
Investors Bullish point robust gains in the first quarter. Just under three-quarters of S & P 500 (.)(Companies SPX) beat Wall Street earnings estimates and investors have highlighted a robust growth. Index of the S & P retail stocks (.)(RLX) recently hit all-time highs.
This week will be earnings from some major retailers, including the largest, of the Wal-Mart Stores Inc. (WMT) nation(N), improvement of home business companies of Lowe (low.)(N) and Home Depot (HD)(N), and Abercrombie & Fitch (ANF) teen clothing retailer(N).
SUPERCLASSING DEFENSIVE
Leading strategists at Goldman Sachs and Credit Switzerland provide the best results for stocks less related to the economic cycle. Doug Cliggott, Chief of the strategy of the fairness of the Credit Switzerland, wrote: "Gone is the profile of U.S. equity performance which suggests a fatty optimism on growth."
Basic products have been at the forefront of the sale for the moment. Large gatherings in hard assets such as gold, silver and oil ending in an ugly slump last week. Silver crashed 30 percent in its worst fall since 1980. Oil, which was until recently worried investors with its sharp rise, fell by about 15 percent.
There are two schools of thought on why commodities are collapsing. One is that program of $ 600 billion of the fed to buy the debt of the Treasury Board has helped investors divert funds to the commodities and equities, creating a bubble in property, which now begins to explode.
"Investors and market watchers are divided on the question whether or not, it is a big problem" Cliggott wrote, adding, CS is "in the" "it is a big deal"camp."."
The other is that it is a sign of imminent weakness in the economy. Copper, known as the "metal with a doctorate" for his ability to act as an indicator for the economy given its industrial applications on a large scale, struck a minimum of five months.
The less appetite for speculative investments showed the outperformance of the defensive stocks, whose fortune is less related to the rise and fall of the economy.
Health of the S & P 500 (.)(GSPA) and utilities (.)(GSPU sectors) have been the leaders of the performance on last month, 2.9% and 2.6% increase, respectively. This is despite a fall of 1.5% growth of revenue of the utilities year in the first quarter, the worst of 10 sectors S & P.
Health care, since long a go - nowhere sector, had a whopping rally. The sector has won seven consecutive weeks and is up to 14.9% this year, the best of 10 sectors S & P.
Energy (.)(PSE), down 7.8% during the past seven weeks, was the worst performer at this time.
Goldman Sachs said, it has become "much less confident in the image of fairness in the short term," out of what he calls his "top trade" in US banks and do the same with a business which has been long industrial actions to consumers.
Cliggott sees a 10% decline at the end of so-called of2 stimulus the Fed - happened at the end of the first round of Fed purchase - as the scenario "base case". The company continues to recommend a financial/long health care trade court, as well as a consumer staples long/short trade consumer discretionary.
EPFR Global, which provides monitoring of flows of funds, said Friday that global equity funds have experienced their first release since mid-March.
SMALL CAPS AND INTELLECTUAL PROPERTY OFFICE
Small and mid-cap stocks, which generally lead a strong market, began to see their outperformance relative to the major capes wane. During this time, momentum indicators show that the strength of S & P 500 began to reduce.
There are also signs of fatigue in the introduction on the stock exchange market after the flood of Chinese industrial property offices and acquisitions by loan earlier this year.
The stock of Chinese dating site Web Jiayuan.com (DATE.)(O) fell in his debut Nasdaq, while the social networking site Renren (RENN.)(N), nicknamed Facebook China, reversed all his earnings in its first market and traded below the offer price.
Goldman maintains stocks have been driven out more further than economic fundamentals justified by increased risk appetite. Indicators of sentiments are high, but outside the peaks earlier in the year, while the CBOE Volatility Index, or Vix (.)(VIX), at levels of the pre-financial crisis investors signs can rest on its laurels.
Peter Lee, a technical analyst at UBS, expects the S & P 500 to run at 1 400 - 1 450 before summer filler.
Fisher believes high expectations will result in the struggles of market through the rest of the year. He expects a lateral movement at the current level.
David Joy, chief strategist of market investment advisers management Columbia, one of the largest fund managers of U.S. with more than 350 billion dollars under management, reduces the fairness in the three months exposure.
Joy said that he started the year with a modest overweight in equities, but was reduced to "neutral". It was in part a response to the end imminent Fed stimulus program, and in part because of the possibility of rupture in the markets of energy, he said.
How the markets will react at the end of the stimulus plan of $ 600 billion by the massive Federal Reserve at the end of June is a wild card.
"That we have a little more close to the end, I think you might begin to see the volatility of the stock market began to increase," said Joy.
(Wall St Week Ahead appears every Sunday.) Questions or comments on this column can be sent by email to: edward.krudy (at) thomsonreuters.com)
(Reported by Edward Krudy and Rodrigo Campos.) (Editing by Andrew Hay and Maureen Bavdek)
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