• Investing Insights & Exclusive Offers → Get Our FREE “Market Brief”
    Sign-up for our free weekly newsletter. Get unparalleled investing insights and exclusive Summer Sale discounts on Hedgeye research.

    Disclaimer: By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails. Use of Hedgeye and any other products available through hedgeye.com are subject to our Terms Of Service and Privacy Policy

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).

CHART OF THE DAY: Micro Quads - Chart of the Day