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 ISE Homebuilders Index (RUF.I) & BMO Junior Gold Index ETF (ZJG.TO)

Broader equity market momentum has slowed in the last few days but a look beneath the hood indicates significant strength in several sectors. Through the summer, major US indices moved up on the back of gains in a few large cap (and large weight in indices) stocks. Now, those stocks have paused but breadth has increased with investors taking profits in early leaders and redeploying capital across a broader spectrum of stocks and sectors. While neutral in the short term, this reallocation indicates improving investor confidence and can be seen as bullish for the medium term.

In particular, US retailers have continued to attract attention with investors responding enthusiastically to strong numbers from sector giants. The retailing sector may remain in the spotlight with several national chains scheduled to report results in the coming week, then focus shifting to the big Black Friday / Cyber Monday holiday sales events which start later next week. Gamestop results on Wednesday could attract attention from the Reddit / meme trading crowd. Canada and the UK report monthly retail sales tomorrow.

Other sectors attracting renewed interest in the US include homebuilders, technology, health care, and financials. In Canada, financials continue to attract attention between insurance earnings early this month and bank earnings at the end of this month with regulatory permission to boost dividends and buybacks boosting sentiment. Pot stocks have also been attracting renewed attention with the US considering wider legalization. Technology and consumer discretionary stocks have also been attracting more attention lately, particularly clothing related companies.

The coming week brings a flurry of economic reports ahead of next Thursday’s US Thanksgiving holiday, including flash PMI reports on Tuesday, durable goods orders next Wednesday and housing related numbers throughout the coming days. Energy market data may also attract attention with winter approaching and the potential for increased supply from US stockpiles still up in the air. There are two central bank meetings this week, China on Sunday night and New Zealand on Tuesday evening.

In this issue of Equity Leaders Weekly, we take a closer look at sector action in the marketplace, particularly US homebuilding and Canadian junior gold stocks.

ISE Homebuilders Index (RUF.I)

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