TECHNOLOGY CONTINUES TO LEAD MARKET LOWER -- MONEY ROTATING TO CONSUMER STAPLES

SOX LEADING TECHS LOWER...ROTATION INTO CONSUMER STAPLES... The prospect for higher rates usually takes its biggest toll on market sectors with the highest p/e ratios. Those are usually the stocks that have led the market higher during the past year. Small caps and techs certainly qualify. That makes both groups especially vulnerable to higher rates and explains why they're being sold more heavily than anything else. Material stocks are also correcting in anticipation of higher dollar and falling commodity prices. The strongest group today is Consumer Staples, which were the weakest group last year. That also makes them the least vulnerable to rising rates and a market decline. Two other of last year's laggards -- healthcare and utilities -- are up today as well. The strongest industry last year was the semiconductor group. Not anymore. The SOX has been underperforming the Nasdaq since last November. The SOX is slipping under its 50-day line today. In a role reversal from last year, the SOX is now leading the Nasdaq lower. It looks like nervous money is rotating from former leaders to former laggards. MORE AFTER THE CLOSE.

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