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All we've heard for the last month or so is how the market is undergoing a tremendous rotation between sectors.
The migration of money from perceived overvalued groups into better values has changed the performance landscape, but is it worth following the crowd?
In most cases, I preach that being part of the crowd is one of the more dangerous moves.
This is because crowded trades tend to be so at their tops, not bottoms. But in a small number of cases, a few of the leading sectors are showing signs that they've yet to become crowded trades.
The following table displays the top-performing, widely traded ETFs since the beginning of July.
The sector rotation has prices in healthcare and related groups outperforming the market. These, of course, had been some of the market's underperforming sectors for some time.
Topping the list is the SPDR S&P Pharmaceutical ETF, which has left the market in the dust over the last month or so, returning more than 12%.
Normally, I would back away from a potentially overbought, crowded move like that, but let me explain why it's different in this case.
About the Author
Chris Johnson is a quant - he's obsessed with building and perfecting mathematical models that allow him to predict, with startling accuracy, the direction of the markets, entire sectors, and individual securities. For the last year, he's been researching and building a new system that lets him move swiftly in and out of the hottest stocks in the market for life-changing gains - entirely on his own terms. The results of his newly-minted Night Trader system are nothing short of amazing.
Chris also contributes to Money Morning as the Quant Analysis Specialist.