Market internals giving up on the QE dream

Energy investors have found themselves in a nightmare the past few months (black arrow below). It is the same nightmare that materials and mining investors (green, blue and brown arrows) have been living through since 2011 as global demand turned down, excess supply piled up and earnings evaporated.

Now the same nightmare is stalking the last late cycle sectors left hovering at hideous valuations: dividend paying (purple), REITs (orange) and financials (red lines shown below). As these sectors also finally give up on the dream that QE could prop up a sagging economy, the 2009 lows beckon prices, and the broad market TSX (grey line,) back to reality.

TSX internals Dec 5 2014

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