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The Rotation Out of Growth and Speculative Names Has Returned

This action is probably driven by the end of the year unwinding as well as concerns about weakness in bonds.
Comments

The action today is a rerun of what we saw quite often in 2021. The DJIA and S&P 500 are doing well, but growth stocks are being hit hard, and speculative biotechnology, small-caps, and many of the stocks that bounced yesterday are being sold hard.

Oil and financials are leading, but there is a large disparity between small-cap value (IWN) , which is up almost 1%, and small-cap growth (IWM) , which is down about 0.7%.

This is the sort of rotational action that plagued the market for much of 2021, but it's hidden by the big-cap names. This time even the weakness in the FATMAAN names and semiconductors is largely hidden by stocks like Ford (F) , GM (GM) , Marathon Oil (MRO) , Discovery (DISCA) , United Rental (URI) , and other non-technology and non-growth names.

Some of my favorite small-caps are being hit hard again, but I'm waiting before I do much buying. This action is probably driven by the end of the year unwinding as well as concerns about weakness in bonds. It is a vicious rotation and makes for some tough trading.

(Ford is a holding in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells F? Learn more now.)

At the time of publication, James "Rev Shark' DePorre had no position in the securities mentioned.