From the desk of Willie Delwiche.
Key Takeaway: Crowded trades have come back to earth, but average stock and cyclical industry groups are making new highs. Economic momentum is building as recovery accelerates. Bond yields are still rising and long-awaited leadership rotation remains underway.
The leadership rotation continues in earnest. From a sector perspective, Technology dropped four spots last week and is on the cusp of falling out of the leadership group for the first time since 2019. Consumer Discretionary dropped another two spots and except for Utilities, would be in the last place in the rankings. Gaining strength this week are Communication Services and Materials. Beyond all the improving and deteriorating conditions seen at the industry group level across market cap levels, our rankings show a consistent theme: 8 of the top 10 groups (and none of the bottom 10) are small-caps and 8 of the bottom 10 groups (and none of the top 10) are large-caps.