In recent days, equity markets, notably smaller-cap and more cyclical indices, surged through important resistance levels that had been in place for over two weeks. This acceleration looks to be part of a bigger internal shift taking hold within equity markets that I would encourage investors to pay close attention to over the coming months through year-end.

Secular growth stocks, notably technology stocks and healthcare have been the two main areas of the market that have outperformed into and off the lows in late March. However, this week saw a significant rotation away from many of the existing growth leaders toward more cyclical groups.

This week’s chart illustrates the ratio between two main market themes represented by Invesco’s high beta ETF (SPHB) and low volatility ETF (SPLV). The high beta group tends to contain more stocks that are cyclical and sensitive to the economy while the low volatility group tends to contain more defensive or safety stocks.

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Over the past week, higher beta cyclical stocks, began to accelerate as traders covered shorts and investors began to accumulate deeply oversold groups from banks, to consumer discretionary stocks to airlines and cruise lines while cutting back exposure to utilities, staples and some of the leading FAANG st...

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