In a year when every corner of the US stock market is rising, it’s no mean feat to leave the crowd in the dust. Yet that describes the run in technology shares in 2019, the best-performing equity sector by far year to date, based on a set of exchange-traded funds.

A key factor for outperformance for equity strategies this year is closely linked with the degree of exposure to tech. As a proxy, consider Technology Select Sector SPDR (XLK), which has surged nearly 32% so far in 2019 through yesterday’s close (July 18). The gain is well ahead of the second-best sector performance: Consumer Discretionary Select Sector SPDR (XLY), which up 25% year to date.

Both ETFs are well ahead of the market overall, based on the SPDR S&P 500 (SPY), which is ahead by a solid 20.7% this year.

Note, too, that all the US equity sectors are posting gains. Even the weakest performer, health care, is ahead by 8.0% year to date via Health Care Select Sector SPDR Fund (XLV).

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The tech-led surge in US stocks this year is tough to beat on a worldwide basis. Other than 2019’s powerful rebound in equity markets in Eastern Europe and Russia — based on Central and Eastern Europe Fund (CEE), a closed-end fund — American shares are in the lead for year-to-date results on a global basis via SPY for the planet’s major regions.

US and tech have been a winning strategy this year, but some analysts are worried that the gravy train may have gone too far too fast. The antidote at the moment to bearish concerns: expectations of a rate cut at this month’s Fed policy meeting.

“Despite a rather lackluster earnings season so far, investors are focusing on the prospect of a considerably easier monetary policy, which is why we see stocks ready to open higher this morning [in overseas trading],” Konstantinos Anthis, head of research at ADSS, tells Reuters.

But the potential for disappointment looms. Jim Bianco of Bianco Research notes that an earnings recession for US companies is lurking. As CNBC reports:

Unless the Federal Reserve intervenes with a bigger-than-expected 50 basis point cut, he’s worried that year-over-year earnings growth rates for the second and third quarters will go even lower.

“The estimates for the third quarter are somewhere just below zero. This is not earnings growth. This is just struggling to stay at zero,” the Bianco Research president told CNBC’s “Trading Nation ” on Wednesday.

Meantime, the rear-view mirror looks spectacular for US equity market momentum. In fact, the upside bias is conspicuous globally too, based on two sets of moving averages. The first definition compares the 10-day moving with the 100-day average, a measure of short-term trending behavior (red line in chart below). A second set of moving averages (50 and 200 days) offers an intermediate measure of the trend (blue line). The indexes range from 0 (all funds trending down) to 1.0 (all funds trending up). Based on this data through yesterday’s close, the bullish climate for stocks around the world is red hot. There are many reasons why the world remains on a upside trajectory, but perhaps the leading catalyst to date is bound up with the crowd’s ongoing love affair with tech.

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