A swing from momentum to value stocks won't last if the trade war and recession are the major risks to the market.
People or machines were selling the winners and buying the losers regardless of the other categories into which these stocks would fit.
The rationale seems to be simple enough; people or machines were selling the winners and buying the losers regardless of the other categories into which these stocks would fit. American Tower, PayPal, American Water Works, Zoetis, and Visa have only one common denominator – they all were up over 40% for the year. Our top five performers early this week include two biotechs, two banks and an industrial, which shared the distinction of being among our worst names for 2019.
In a flash, the market suddenly began to ferociously sweep up the eight-month losers and pummel the year's winners. The top-performing stocks in the S&P for the first three days of this week are up an average of 14.1% compared to an average loss of 29% through September 6. Their ranks included biotech, retail, materials and energy- both growth and "value" names. The week's worst ten were off an average of 9% week-to-date versus an average gain through last Friday of 57%.
In all honesty, without higher interest rates, the big banks are unlikely to outperform; unless consumers suddenly about-face from their online shopping addiction, most traditional retailers cannot revitalize; and unless a major country slows oil and gas production, you can't drive a long-term rally in energy.
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