Yesterday we gave you a report card from our July 3rd style and market cap forecast. Today we’re going to update our sector expectations. In a nutshell, we were basically right.

We favored financial stocks, feeling they were undervalued. We liked telecom as well. We suggested investors steer clear of energy and basic materials, as they had passed their prime. We also observed how utilities and staples had shown the most relative strength at that time. Take a look at how things have panned out since then.

The one surprise was transportation - we assumed they had peaked in May, as they fell the fastest in June and early July. However, they’ve recovered pretty well. Maybe there’s something to them after all. We think telecom is still an undervalued area….mobile telecom in particular.

We’ll keep tabs on these charts, but we’re still expecting the same - it’s rotation time. The six month leaders are apt to become the laggards, and the six monght laggards are apt to take the lead. We’re already seeing hints of this.

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