AVUV - This Bull Market Is Roaring On Rotation

2024-02-18 07:01:32 ET

Summary

• Rotation out of big tech stocks and into the rest of the market is evident in recent trading.
• The underperformance of small-cap and equally weighted indexes may be reversing, improving market breadth.
• Inflation concerns are likely temporary and should not undermine market gains, with a rebalancing of spending patterns expected.

At the beginning of this year, I suggested that the next leg up in this bull cycle would be instigated by a rotation out of the Magnificent 7 stocks and into the rest of the market. The year certainly didn’t start out that way, but the past several days seem to be more reflective of that scenario. The S&P 500 hit another new all-time high on Thursday with the technology and communication services sectors, which are dominated by big tech, being the only two sectors to finish with small losses. You can see the rotation from Thursday’s trading in the heat map below....

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