Global leadership continues to evolve, with strength emerging across select sectors and regions while U.S. market breadth tightens. We remain focused on quality, dividend growth, and disciplined positioning as shifting trends create new opportunities for active investors.
Key Points:
Breadth in the Market is Narrowing
- Market breadth has weakened, with fewer stocks across major indices in uptrends. In the NASDAQ 100 (QQQ), only about 40 percent of companies are showing positive price trends, down from 84 percent in May. This suggests investors should remain selective and slightly defensive.
International Equities and Commodities Continue to Lead
- International markets, particularly Japan, Korea, and parts of South America such as Peru, continue to outperform U.S. equities. Commodities, including gold, silver, copper, and uranium, remain leadership areas with strong relative strength versus the S&P 500 (SPX).
Financials and Industrials Are Core Strengths
- Financials remain a key overweight, supported by strong earnings and rising dividends. JPMorgan (JPM) and Canadian banks are performing steadily. Industrials are also leadership sectors, with Caterpillar (CAT) and Finning International (FTT) showing new highs, reflecting strength in infrastructure and defense-related spending.
Materials and Energy Are Emerging as Key Overweights
- Materials are now Barometer’s largest overweight, benefiting from rising metals and mining activity. Energy remains constructive, with Imperial Oil (IMO), Tamarack Valley (TVE), and Headwater Exploration (HWX) all trending higher ahead of seasonal tailwinds.
Defensive Sectors Lag; Tech is Consolidating
- Consumer-related sectors, discretionary, staples, housing, and retail, remain weak, along with real estate and REITs. Large-cap tech and semiconductors are consolidating, and exposure has been reduced. The portfolio now favours dividend growth and high-quality names over crowded growth areas.
Inflation Hedge Remains the Focus
- The market continues to price inflation as a greater risk than disinflation. Commodities, dividend growers, and financials serve as preferred inflation hedges, while fixed income remains less effective. Barometer is maintaining modest cash and focusing on assets that provide a rising stream of income to offset higher living costs.