December 7, 2023
By Peter Bower
After the big move in November, this week the stock market seemed to go through a period of digestion. Underneath the surface, quite a lot is taking place. Small- and mid-cap stocks are continuing to play catch-up, while the previous leaders, the seven mega-caps, are marking time. Since these huge companies make up almost 40 percent of the S&P 500 index, their stagnation covers up good things happening among the other 493 stocks.
One down-and-out sector is also finally coming alive – financials, especially banks. This category has been unloved and avoided until recently. Now there are signs of life. They are cheap and are attracting buying interest.
The process just described is referred to as rotation. (Interest rotating from one group to another.) It will not proceed in a straight line, but the Bull and his partners expect more of this. In fact, we would not be surprised to see the previous leaders provide little return for a long time while the rest of the market does just fine. We may be just beginning that process. This will make for a much healthier and broader market. Stay steady my friends.
The Lonely Bull
