Financials are starting to lead, as Utilities begin to break down. All it took was one of the most historic 6 week drops in the VIX ever to finally create a flip in market leadership.
Whereas emerging markets, when they opened the morning session weak would continue to be weak in the past, now buyers are stepping in causing many broad based overseas ETFs to outperform by end of day. On strong dollar days driven by improving economic data and expectations of Fed hikes, cyclicals power through. Risk-on is looking more and more risk-on. Risk-off then becomes exceedingly risky for asset allocators who have tilted their portfolios towards yield. Bonds and dividend plays from a buy and hold perspective may be in a world of hurt if this trend continues.