It was about a week ago today we updated our expectations regarding styles (value versus growth) and market cap (large versus small). The initial discussion took place in the July 3rd edition, but a wild market pretty much required an update on the 17th. Now - though only five days later - it’s time to revisit the theory….that’s just how quickly things have been moving.

You might recall we were looking for simple rotation. By that, we just meant growth’s leadership in the early part of the year was going to be trumped by a revival of value. In terms of market cap, we specifically felt mid cap growth was going to weaken considerably, and anticipated large cap value would pull itself out of the deep hole in which it had been buried. 

By the 17th (last Thursday) we were already seeing hints of this rotation. And how about since then? Check out the results table - you can see for yourself what’s happened over the last five days (which doesn’t include today’s data). Value has led the way…mostly small cap, but large cap too. Growth has trailed. Mid cap and large cap growth have decidedly not participated in the bounce. That’s pretty much what we expected.

So is now the time to pile on the leaders and dump the laggards? Not quite. The time to do so was a week ago, or three weeks ago. No, at this point we think the market’s going to take a break….perhaps a long weekend. That’s fine - we need to burn off some of the euphoria and see stocks fall back a bit. When the profit-taking is done, then we can start fishing based on this relative strength in certain areas. This isn’t a five-day war. Five days is just a battle…the war will last for weeks. And, timing is still half the battle.

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