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Matt's Market Insights

 

The way I see it, the recent bifurcation of the market has two ways to play out. Either the weakness in small caps and tech will bring the broader averages down into a correction, or the pendulum will swing too far and reignite the desire to own growth stocks, the sector that typically leads bull markets higher. At this time I'm more inclined to favor the latter and here is why. Before I go on I should admit that I'm going against the grain on this one, because historically when growth stocks begin to underperform, that underperformance lasts for a while, around ten months on average.

 

The chart below looks at the performance of the Utilities compared to Cyclical growth stocks. As we've discussed, the market's appetite changed in early March. After gorging on high growth, high beta names for many months, these high-flyers began to sour and investors quickly spit them ... Log in or subscribe to continue reading.


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