Cameron Dawson, CFA, CIO at NewEdge Wealth joined Benzinga's Premarket Prep team to take a look at what's happening in the energy sector.
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00:00All right, Cameron Dawson, Chief Investment Officer over at New Edge Wealth. Cameron,
00:04how are you doing on this Friday morning? Good, good. Good to see you guys.
00:09Cameron, right now, are there any, I guess, specific sectors that you're looking at or
00:14have been in focus for you? Well, we have certainly started to see this drifting lower
00:21in some of the tech leadership. And it's important to note because it's such a big
00:26part of the index. It's 30% of the S&P 500. So what we've been saying about tech is that you
00:32don't need it to be leading like it did at the beginning of the year, but you certainly can't
00:36have tech be outright weak in order for this market to continue to press higher. We do think
00:41that if you're looking at some of those classic defensive areas, mostly utilities, that they are
00:46extremely overbought. If you look at the utility sector, it's now trading at 20% above its 200-day
00:52moving average. That 20% level, every time you see any index, whether it's utilities or the
00:58semiconductors or the technology stocks more broadly, typically is followed by weaker forward
01:05returns unless you're coming out of a major market low, which is just to say that overbought levels
01:12like this are typically signs that you're going to have some consolidation. So we're cautious at
01:18chasing some of the things like utilities, which have run a lot. We see that tech, we have to watch
01:23that very closely. And then you're starting to see this bubbling up of life and some of the
01:29unloved areas like energy. Energy has certainly seen some positive volatility in the last couple
01:35of days. However, we have to be very aware that it's been in this downtrend really since April. So
01:42energy is one of those where it's close to breaking out. And if it does, it could become a lot more
01:46interesting.