Trader Talk

Riding the cyclicals: Rally boosted by key sectors

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Clearly I've got to leave the country more often.

The market bottomed and began to rally just as I left for India on February 6th. Since then, the S&P 500 has rallied 5.8 percent. The is up more than 800 points. Even emerging market stocks have rallied.

Despite poor economic statistics, most recently January U.S. retail sales on Friday, the rally has been largely off of cyclically oriented names.

Sector leaders since the Feb. 5th bottom include the following (percentage gain):

Materials (6.0)

Tech (5.6)

Cons. Discretionary (5.1)


Among the more defensive groups, only Healthcare, up 5.6 percent, has been strong.

Speaking of emerging markets: I spent the last 10 days in India (Mumbai and Goa)—and the talk in the Indian papers was all about the continued slowdown in the global economy.

How far can gold go?

India has been hard hit by the Federal Reserve's tapering program, as its weak rupee has been a major problem for oil imports (India is one of the largest importers of oil in the world) and gold sales.

Up until last year, India was the world's largest consumer of gold, but gold is priced in dollars. As a result, the rise of gold, coupled with attempts to curb bullion consumption, have left Mumbai's Zaveri Bazzar—the world's largest gold market—relatively dead.

India's economy is expected to grow roughly 4.5 percent in 2014, and may be weaker. That is a long way from the relatively heady 7 percent growth of just a few years ago. It may sound like a lot, but in a country with over 1.2 billion people needs growth at least that high just to find a way to stay in place.

--By CNBC's Bob Pisani