ROTATION OUT OF GROWTH AND INTO VALUE STOCKS CONTINUES -- VALUE ISHARES SURGE TO EIGHT-MONTH HIGH WHILE GROWTH ISHARES BACK OFF

ROTATION INTO VALUE CONTINUES... Yesterday's positive vaccine news contributed to a rotation into economically-sensitive value stocks at the expense of technology driven growth stocks.  That rotation was accompanied by a jump in bond yields which touched an eight-month high.   Signs of that rotation can be seen again today.  While the Dow is trading higher today, the Nasdaq market is losing ground.   Technology is the day's weakest sector, while Internet stocks are weighing on the communications sector.    Industrials are the day's strongest sector.    Energy stocks are up again as well.    Financials, which had a strong day yesterday, are consolidating today while bank stocks are gaining more ground.   Small cap stocks are up again today with the Russell 2000 trading in record territory.   More concrete evidence of this week's rotation can be seen by the interaction between growth and value ETFs.

Chart 1 shows the S&P 500 Value iShares (IVE) gapping sharply higher yesterday to the highest level since February.   Chart 2, however, shows the S&P 500 Growth ETF (IVW) backing off from resistance along its early September peak.   According to the Wall Street Journal, economically-sensitive value stocks outperformed tech-dominated growth shares yesterday by the biggest margin on record going back to 1993.   A lot of traders and investors have been waiting for a long-awaited rotation back into more value-oriented parts of the market that had been lagging behind technology stocks.   It may have taken some positive vaccine news to help speed that rotation along.