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Turtle vs. Hare

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During most periods of economic and financial market transition, the dominant concern centers around whether the equity market's performance can be justified given the fundamental backdrop. The transition period we are in is no different and the gains have been greater than most expected. What we find interesting is the market has managed to put in the gains despite relative underperformance of some of the largest stocks (by capitalization). If the top 10 stocks in the S&P 500 (SPX), which account for 23.7% of the index, attract more interest, maybe the old and stogie SPX might act as the "turtle vs. the hare."

In our view, the poor relative performance of "biggest of the big" could improve as expectations for sustainable economic recovery into next year take hold. Clearly, that prospect of more sustainable economic recovery has led to extraordinary gains in the more nimble small and mid-capitalization issues and it may be time for their larger brethren to play catch up. Let's take an intermediate-term technical look at the price action and momentum of the SPX "top 10;"

General Electric & Microsoft



Walmart & Exxon Mobil






Pfizer & Citigroup




Intel & AIG




IBM & Johnson & Johnson

A correction isn't the issue, it is what to do once one actually comes...
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