One battle to keep an eye on in 2021 is “The reopening trade versus the what has worked trade.” There was a clear winner last week.
The reopening trade versus the what has worked trade really results in two different portfolios. The former favors the value style and the latter favors technology and the growth style.
Last week, the what has worked trade easily outperformed. Growth significantly outperformed value with the growth sectors of technology, consumer discretionary, and communication services outperforming those value sectors such as energy, financial, consumer staples, and utilities. One week doesn’t make a trend but if this continues then we need to question what the market is trying to tell us.
For the week ahead more than 100 S&P 500 companies report earnings. Among them include Apple, Facebook, Microsoft and Tesla. We usually don’t talk about individual stocks, but for this week let’s watch those Tesla earnings. Why? Well, the stock has been on an incredible run – so much so that it was included into the S&P 500 and is now a top holding within that index. Given the excitement with Tesla stock, could their earnings be a market mover?
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