It was never just large-cap tech. That was a lie. And as it turns out, gains in last week’s pivotal session were pretty much everything BUT large-cap tech. In fact, small-caps outperformed large-caps on Thursday by 450 basis points. According to our friends Ryan Detrick and Charlie Bilello, that's a six standard deviation event, writes JC Parets, founder of AllStarCharts.
If markets were actually efficient then six sigma events wouldn't happen as often as they do. They should come around once every 500 million days. It happened last week. Because markets are not efficient. The random walk theory was just a bad theory that some weird academic blatantly made up years ago.
Meanwhile, here's the iShares Russell 2000 ETF (IWM) going out at new 52-week highs last week.
I don't want to harp on the lack of efficiencies in this market. But I do think it's worth pointing out that the market continues to prove that these people claiming markets are efficient are not here to help you.
Anyway, sector rotation is the lifeblood of a bull market. We've seen it for 100+ years. We have the math. It's NOT a theory. It's fact. And we're seeing it again now.
Remember we recently discussed the most bullish thing that can happen to this market? It's happening:
Towards the end of bull markets, you see important sectors like this (industrials) completing tops. During bull markets, nowhere near the end, you tend to see buyers coming in at support in the most important sectors.
So, what do we do about it? We're buying stocks very aggressively. We have been the past couple months. But now there are more names to own, and different ones that are working.
