From the desk of Steve Strazza @Sstrazza
A major theme we’ve been hitting on in recent months is that we’ve reverted to an equity market landscape dominated by US Large-Cap Growth stocks.
So we know that’s where the strength has been. But up until March-May of this year, these relative trends had actually been favoring Small-Caps and Value, and even other parts of the world over the US.
So was this just a counter-trend rally, or the beginning of a sustainable rotation? The real answer is it depends where you look and how you look at it.
But we are definitely seeing some developments that suggest there could be a rotation back in favor of value-oriented and cyclical stocks in the near future.
This becomes particularly clear when we look at the relative trends of some of these groups vs the S&P. And if we see these industry groups break out on an absolute basis – which many of them already are – this could be the extra juice needed for a true relative trend reversal that would put value back in the driver seat.
Let’s dive in and review some of these areas now!