This week’s comment focused on the divergence of large-caps from small-caps. We speculated about how this would end. Large caps had been trending in the opposite direction to small caps, growth stocks, and other large-caps. As we moved lower, except for the few hours that followed the Fed meeting where there was a massive spike higher, it became obvious that large-caps were joining the party. These gains soon dwindled. This morning, we gapped down to make new lows in tech/small-caps/growth, while the S&P 500 (SPY) made a slightly lower high. Today’s commentary will discuss the next market move as well as some changes to our strategy due to the bearish price action. Read on below to find out more….Enjoy this version of my weekly comment published on December 20, 2021 by the POWR Growth newsletter.

Last week, the S&P 500 ended in consolidation while the was trending lower. After a brief spurt higher following the FOMC, the S&P 500 also joined the bear party and moved lower. Currently, it’s about 1.5% above its lows from early December, while the Russell 2000 tested these levels today.

The trigger for today’s move lower was Senator Joe Manchin of West Virginia saying he is a No on the BBB bill. I do think this slightly lowers growth expectations given the bill’s $2 trillion size and consensus that it would be passed.

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