The market is rotating. Value is back. Momentum is out. Cyclicals rule. Defensives are so August. No one wants low volatility.
What is it we are rotating out of, and what are we rotating into?
There’s a lot of confusion about different ways to slice and dice the markets, and which stocks fall into which categories. For example, many momentum stocks this year (those that show price appreciation) have been defensive stocks like consumer staples, but not all momentum are consumer staples.
Confusing? Let’s try to sort out some of the differences.
First, are there signs of rotation? Yes. Since bond yields bottomed at the end of last week, cyclical stocks — which tend to do better when the…