Mega-Caps Powering The Market

Broader participation has not unseated the leaders

Key Takeaway: The base is broadening, but the market remains top-heavy.

In terms of industry groups above their 10-week average, we’ve gone from 1% to 94% in less than a month.

But even with this recovery, this is a mega-cap led market. 9 of 24 large-cap industry groups made new 13 highs last week, versus just 6 mid-cap groups and only 3 small-cap groups.

At the sector level, Large-cap Information Technology and Communication Services are the areas making new 52-week highs. They have been the leaders all year and both are more than 50% above last December’s lows. They are also the most top-heavy of the large-cap sectors. Six of the eleven sectors are still below last December’s peaks.

So while sector trends overall remain somewhat sloppy, the strength at the top is undeniable. In the past decade-plus, the trend for Technology has only been stronger than it is currently on two occasions: coming out of the Financial Crisis and coming off of the COVID lows.

Paid subscribers can keep reading to see how our Sector Rotation Model is currently positioned and to download the latest Relative Strength Rankings report.