A few days ago I posted an updated sector rotation chart. However, that’s only half the picture of the current market environment. I’m just as interested in market cap (large, mid, small) and style (value versus growth) rotation. It just so happens that e really hadn’t seen any… until now.

With our last look on October 20th, small caps were on a roll, and large cap value was dragging the bottom.  Since then (as you can see below), large cap value has taken on new life, mid caps are running hot, and small caps have faded.

Style and Market Cap Rotation - 11/17/09

Now, before anyone over-reacts too quickly and too firmly, bear in mind this is ia a very young development and may be temporary. I’d really like to see the rankings survive a couple more market shake-ups. It does make sense though, if we are indeed headed into the second phase of a new bull market.

See, small caps should lead the beginning of a bull market (and they did), but larger companies tend to catch up as the bull trend matures (which they may be now).

As for styles, there are no strong sequential tendencies there. They can ebb and flow without warning, and as such, they just need to be monitored. (That said, you should know I have a value bias; you should laso know I tend to experience more growth from my value holdings than most people do from their growth-specific positions.)

In any case, now the importance of the allocation strategy should be a little more clear. Here’s where we currently stand on that front, though as I’ve said before this is hardly a full portfolio yet.

Portfolio Allocation - 11/17/09