Friday, August 19, 2016

Rotation into cyclical shifts market into high gear, but first?

Rotation into cyclical?

not without a fat dip first, I reckon.



This may be about to change.  Below is the price ratio of the PowerShares S&P 500 High Beta Portfolio (SPHB) relative to the Powershares S&P 500 Low Volatility Portfolio (SPLV).  A rising ratio means high beta (riskier) stocks are on average outperforming low volatility (less risky) stocks. The top shows the relative strength of that ratio, and beneath the middle pane is the performance of the two Exchange Traded Funds since a significant “bull” market began in October 2011.  High beta, which should have led the last few years, ended up underperforming low volatility by a whopping 3,380 basis points.