Below is a chart and brief excerpt from today's Early Look written by Senior Macro analyst Darius Dale.
All told, as much as we found it prudent for investors to stop shorting the cheap-high-beta-cyclicals style factor complex (i.e. the stuff that tends to lead the market higher in Quad 1) in late-APR, we are finding it similarly prudent for investors to avoid chasing perceived “recovery trades” here at the end of JUN.
That’s my long-winded way of communicating the math I really want you to take away from this note: Small Caps, High Beta, and Value are the three worst-performing style factors in Quad 3, which is the economic regime we have the US economy sliding into starting in AUG. FWIW, the [vicious] bear market bounces in IWM, SPHB, and IWD all peaked on 6/8.
What is the best-performing style factor in Quad 3, you ask? Guess. It’s the same one that closed at a new all-time high yesterday: Secular Growth (QQQ).