Tom Dorsey is one of the leading technical researchers of our time. He is the president and co-founder of Dorsey, Wright & Associates, a registered investment advisory firm based in Richmond, Virginia, that specializes in point-and-figure charting, relative strength and other technical analysis. He has authored several books, including "Point & Figure Charting," "Thriving as a Broker in the 21st Century" and "Tom Dorsey's Trading Tips."
Dorsey recently sat down with ETF.com to discuss the sectors and international markets exhibiting the greatest strength, according to his indicators. He also points out the weakest markets that could appeal to contrarians. Finally, he talks about the strength in long-term bonds, and what that means for the likelihood of a rise in interest rates.
ETF.com: A few months ago, you told us your top U.S. sectors were semiconductors, drugs, biotech and aerospace. Are those four still flashing hot? Any other sectors rising?
Tom Dorsey: They're all the same—semiconductors, biotech, aerospace and drugs. That goes back to the physics principle—things in motion tend to stay in motion.
ETF.com: I noticed these are all subsectors. What are your rankings telling us about the strongest broad sectors?
Dorsey: No. 1, relative strengthwise, is health care. Industrials are ranked No. 2. Consumer cyclicals, No. 3. Technology, four; consumer non-cyclicals, five; financials, six; telecom, seven; utilities, eight; basic materials, nine; and the last in that group is energy.
ETF.com: What about international ETFs? What countries or regions are showing strength right now?
Dorsey: The countries topping the list are Indonesia, or the iShares MSCI Indonesia (EIDO | B-99). Second comes the iShares Dow Jones US ETF (IYY | A-100), because internationalwise, the U.S. is in the mix with everybody else. Switzerland comes in third, with the iShares MSCI Switzerland Capped ETF (EWL | B-95). The MSCI Belgium Capped ETF (EWK | B-64) comes in fourth, and the iShares MSCI Philippines ETF (EPHE | B-99) next.