US Markets Trading Report, January 21, 2026
Market Rotation in Full Swing Following Chaos in Davos — Leadership Broadens Beyond Tech & AI
Executive Summary: January 21, 2026 — U.S. Market Analysis
The dominant theme of recent trading is a pronounced and healthy rotation away from the concentrated, mega-cap growth leadership of Technology and Communications. Capital is decisively moving toward cyclical value, real assets, and defensive yield, creating a “broadening bull” environment. Sector-level and stock-specific breadth metrics (IN/INSTAT) reveal strong institutional sponsorship in Energy, Materials, Industrials, and defensive sectors (Health Care, Staples, Utilities), while former leaders in Tech and Financials show clear signs of distribution and de-risking.
Key Takeaways:
1. Sector Leadership is Shifting: Today’s clear pro-risk leadership is anchored in Energy (XLE), Materials (XLB), and Industrials (XLI), supported by robust trends and exceptional breadth. Defensive sectors like Health Care (XLV) and Consumer Staples (XLP) are also seeing strong accumulation, blending growth with stability. In contrast, Technology (XLK) and Financials (XLF) are the primary laggards, exhibiting negative short-term momentum and weak sponsorship.
2. Stock-Picking Drives Performance: The rally is not a broad-based beta surge. Capital is flowing into specific sub-sectors with earnings visibility and real-asset leverage—such as energy infrastructure, fertilizers, defense contractors, and machinery—while rotating out of expensive software, internet platforms, and long-duration growth stocks, despite their strong longer-term gains.
3. International Markets Echo the Theme: This rotation is a global phenomenon. Canada’s market is led by energy and materials (CNQ, SU, CCJ). Mexico and South America show powerful, broad-based bullish profiles, with leadership in financials, energy, and consumer staples (ITUB, PBR, ABEV, KOF), indicating a strong emerging market and commodity-driven trade.
4. Contrarian Watch: The sell-off in former darlings is creating potential reversal setups. Technology (XLK, MSFT, META), Communications (XLC), and deeply oversold Financials (XLF, JPM) are tagged for potential mean reversion if macro conditions stabilize. Specific stocks like MercadoLibre (MELI) in South America and Lululemon (LULU) in Canada also present high-risk, high-reward contrarian opportunities after severe derating.
Bottom Line: The market is undergoing a fundamental repositioning. Leadership has diversified beyond the AI and mega-cap narrative, favoring sectors and stocks tied to cyclical recovery, tangible assets, and reliable cash flows. This rotation suggests a more sustainable advance if it continues, though extended leaders in Energy and Materials warrant monitoring for exhaustion. The primary risks are a sharp reversal in commodity prices or a re-acceleration of growth-stock selling pressure.
Analysis of Capital Flows Between Sectors (Data Group 1)
The sector tape shows a distinctly pro‑risk bias, with strong positive 1D and 1M returns in Energy, Materials, Industrials, Health Care, Staples, and Utilities, and very high INSTAT readings indicating broad institutional sponsorship in most defensives and cyclicals. Technology and Communications are the main sources of dispersion: both print negative 1W and 1M returns and only modest IN/INSTAT, signalling a cooling of the prior AI/mega‑cap leadership in favor of more diversified sector participation. Financials are the clearest laggard, with negative 1W and 1M, negative AT/ST, and one of the lowest INSTAT profiles in the sector grid, pointing to ongoing de‑risking and repair rather than broad accumulation. Real Estate is in a constructive repair phase with positive 1M and solid IN/INSTAT but still trades with more mixed short‑term momentum than the top‑quartile leaders.
Leadership is anchored in Energy, Materials, Health Care, Consumer Staples, Utilities, and Real Estate, all of which display high IN (typically 50) and INSTAT in the upper decile, coupled with firm 1M trends. Within cyclicals, Industrials exhibit strong 1M performance and very high INSTAT, while Consumer Discretionary looks more mixed, with modestly negative 1W and flat 1M despite positive IN, suggesting a more selective pro‑risk tilt rather than broad beta buying. Technology, Communications, and Financials collectively mark a shift away from prior growth/financial leadership: negative short‑term returns, weaker breadth, and in the case of Financials, clearly risk‑off positioning. Overall, the grid reads as “broadening bull” with a rotation toward value/real‑asset and defensive yield, and away from crowded growth and financials.
Sector leaders and laggards
Clear leaders (pro‑risk / real assets).
Energy (XLE): Strong 1D and 1M, IN=50, INSTAT ~100; classic “pro‑risk cyclical leadership” with robust trend and breadth.
Materials (XLB): Solid positive 1D/1W/1M, IN=50, INSTAT high‑90s; broad upside participation, trend acceleration.
Industrials (XLI): Positive across 1D/1W/1M with IN=50 and INSTAT high‑90s; reflects capex/logistics strength and “cyclical quality” bid.
Health Care (XLV): Positive multi‑period returns, IN=50, INSTAT ~100; “defensive growth leadership” with stable accumulation.
Consumer Staples (XLP): Strong 1M and high INSTAT; “defensive yield leadership” consistent with stability‑seeking inflows.
Utilities (XLU): Modest but positive 1M, mid‑range INSTAT; “defensive unwind to stable accumulation” as higher‑beta segments cool.
Real Estate (XLRE): Positive 1M, IN=50, INSTAT high; “repair phase” with rates headwind easing and selective REIT buying.
Mixed / neutral sectors.
Consumer Discretionary (XLY): Positive 1D and mild positive YTD but negative 1W/1M, with IN>30 and mid‑range INSTAT; “selective pro‑risk, not broad beta.”
Communications (XLC): Negative 1W/1M and modest INSTAT despite prior 1Y strength; “cooling prior leadership,” neutral/mixed flows.
Clear laggards (risk‑off / repair).
Technology (XLK): Negative 1W/1M, only modest IN and low‑teens INSTAT; “growth leadership unwind” after a very strong 1Y run.
Financials (XLF): Negative 1W and notably weak 1M, negative AT/ST, low INSTAT; “Bearish/Repair” with ongoing distribution and risk trimming.
Key sector‑level anomalies to tag
Extended leaders
Energy – XLE.
Strongly Bullish, extended: INSTAT ~100, IN=50, with 1M near double‑digits and very strong YTD; monitor for exhaustion and mean‑reversion risk.
Materials – XLB.
Strongly Bullish, extended: INSTAT high‑90s, IN=50, 1M >7%; broad cyclical materials bid that could overshoot if macro cools.
Health Care – XLV.
Strongly Bullish, extended defensive growth: INSTAT ~100, IN=50, multiple periods green; high conviction but crowded.
Consumer Staples – XLP.
Strongly Bullish, extended defensive yield: INSTAT ~99, IN=50, 1M >6%; classic “safety trade” that can reverse quickly on risk‑on shifts.
Deep laggards
Financials – XLF.
Strongly Bearish/Repair: INSTAT deeply negative vs other sectors, with 1M and 1W both negative and AT/ST also negative; persistent de‑risking and valuation overhang.
Technology – XLK.
Bearish/Repair: INSTAT low‑teens, negative 1W/1M despite strong 1Y; indicates ongoing de‑crowding of mega‑cap growth and AI‑adjacent names.
Communications – XLC.
Bearish/Repair bias: modestly positive AT, but negative ST and weak 1M; prior winners see profit‑taking and rotation to other sectors.
Potential contrarian sector ideas
Technology – XLK.
Contrarian watch: Negative near‑term returns with IN still positive and 1Y very strong; early capitulation could set up a rebound if macro and rates re‑stabilize.
Communications – XLC.
Contrarian watch: Negative 1M and 1W against solid 1Y performance; sentiment has turned but core franchises remain intact, suggesting potential mean reversion.
Financials – XLF.
Deep contrarian watch only: Very weak INSTAT and negative momentum, but 1Y still positive; any stabilization in rates/credit could catalyze a sharp repair rally.
Analysis of Capital Flows Within Sectors (Data Group 2)
Across Energy through Communications, intra‑sector breadth is generally bullish, especially in Energy, Materials, Industrials, and several high‑quality Consumer and Health Care names, where many stocks show INSTAT in the 80–100 range and double‑digit 1M moves. The buying is not purely ETF‑driven: leadership is concentrated in specific subsectors (e.g., energy infrastructure, chemical/fertilizer, machinery, defence contractors, select retailers and health‑care innovators), while long‑duration growth (software, internet, some semis) shows notable drawdowns and negative INSTAT despite still‑strong 1Y gains. This pattern signals an environment of stock‑picking and rotation: capital is chasing earnings visibility, cash flows, and real‑asset leverage while rotating out of expensive growth and late‑cycle consumer names.
In Energy, breadth is extremely strong, with large caps like Exxon Mobil (XOM), Chevron (CVX), and pipelines such as Energy Transfer (ET), Enterprise Products (EPD), and Williams (WMB) all showing high IN and INSTAT with solid 1M trends. Materials leadership is similarly broad: CF Industries (CF), Alcoa (AA), steel names like Commercial Metals (CMC), Steel Dynamics (STLD), Nucor (NUE), and miners like Rio Tinto (RIO), BHP (BHP), and Southern Copper (SCCO) are all in Strongly Bullish regimes with elevated INSTAT and high‑teens to mid‑20s 1M gains. Industrials show a blend of cyclical and quality leadership, with Caterpillar (CAT), Deere (DE), defence names like Lockheed Martin (LMT), and infrastructure names like Quanta (PWR), TransDigm (TDG), and Emerson (EMR) all carrying high INSTAT and persistent 1M strength.
Health Care breadth remains constructive, with mega‑caps such as Johnson & Johnson (JNJ), Eli Lilly (LLY), Amgen (AMGN), Gilead (GILD), Thermo Fisher (TMO), Danaher (DHR), and UnitedHealth (UNH) showing high INSTAT plus positive multi‑period returns, supporting the “defensive growth” theme. Consumer sectors are more mixed: several discretionary names (e.g., Tesla (TSLA), Carvana (CVNA), high‑beta restaurants) show volatile 1M moves and dispersed INSTAT, while Staples contain a dense cluster of extended winners such as Celsius (CELH), Monster (MNST), Costco (COST), Walmart (WMT), and Philip Morris (PM). Tech and Communications contain some of the strongest absolute 1Y winners (e.g., Micron (MU), NVIDIA (NVDA), AMD, Intel (INTC), Microsoft (MSFT), Meta (META)), but many now show negative 1M and compressed INSTAT, indicating distribution and de‑crowding rather than fresh leadership.
Stock‑level leaders and laggards by sector
Energy.
Leaders: XOM, SLB, ET, EPD, WMB, BP, SHEL, TTE, EQNR, CNQ, SU, CVE, IMO – all with strong 1M performance, IN near 50, and INSTAT in the 90–100 range; classic “pro‑risk energy complex leadership.”
Laggards: Names like MPLX (MPLX), Kosmos (KOS), and some gas‑heavy E&Ps with weaker IN and mixed 1M profiles; “idiosyncratic repair/volatility” rather than sector‑wide stress.
Materials.
Leaders: CF, AA, CMC, STLD, NUE, RIO, BHP, Corteva (CTVA), Sherwin‑Williams (SHW), Reliance Steel (RS) – Strongly Bullish with double‑digit 1M gains and INSTAT high‑90s to 100; “cyclical reflation leadership.”
Laggards: Specialty chemical and construction names like Huntsman (HUN) and some packaging names with strong 1M but low 1Y or prior drawdowns; many are still in “late‑stage repair / catch‑up” rather than fully mature trends.
Industrials.
Leaders: CAT, DE, GE Aerospace (GE), TransDigm (TDG), Quanta (PWR), Parker‑Hannifin (PH), Honeywell (HON), LMT, Northrop (NOC), Cintas (CTAS), Waste Management (WM), Vertiv (VRT); all carry very high INSTAT and strong 1M, indicating broad pro‑risk cyclical leadership.
Laggards: Airlines like United (UAL) and Delta (DAL), and logistics names with negative 1M and weaker INSTAT; these are in “repair / sentiment overhang” despite the broader industrial bid.
Utilities and Real Estate.
Leaders: Many utilities (PPL, ETR, NI, ES, DTE, NEE, FE, EXC) plus high‑quality REITs (O, PSA, AGNC, American Healthcare REIT (AHR), CBRE, Simon Property (SPG)) show INSTAT in the 80–100 zone with positive 1M, consistent with “defensive yield leadership.”
Laggards: American Water (AWK), PG&E (PCG), Crown Castle (CCI), SBA (SBAC), AvalonBay (AVB) carry INSTAT ≤ −80 or negative 1M trends; these represent “rates‑sensitive laggards / structural risk pockets” within otherwise constructive groups.
Consumer Discretionary and Staples.
Leaders: Housing and repair names (DHI, LEN, LOW, HD, GPC), select retailers (ROST, BURL, FIVE, LEVI, DKS), autos/parts (AZO, ORLY), and restaurants like Cheesecake Factory (CAKE) all show high INSTAT and strong 1M; “domestic consumer resilience” theme.
Laggards: Target (TGT), Best Buy (BBY), some QSR and digital consumer names (CAVA, SHAK, DASH, CMG) have negative INSTAT or highly volatile 1M; they are in “crowded unwind / profit‑taking” mode.
Staples leaders: CELH, MNST, ADM, KO, PEP, PM, COST, WMT, Kraft Heinz laggard (KHC) in sharp drawdown; broad staples strength but with pockets of aggressive de‑rating.
Health Care.
Leaders: JNJ, LLY, AMGN, GILD, TMO, DHR, ISRG lagging but many device/drug majors (MRK, MDT, NVS, UNH, VTRS, MOH) show strong 1M and high INSTAT; “defensive growth and medtech innovation” leadership.
Laggards: Baxter (BAX), Illumina (ILMN) prior‑cycle stories in long‑term drawdown despite recent rallies, plus high‑beta names like HIMS, EXAS with very volatile 1M; these sit in “repair/speculative” buckets.
Financials.
Leaders: Select brokers and asset‑light names like Interactive Brokers (IBKR), Fifth Third (FITB), PNC, HSBC, ICE, CME, BlackRock (BLK), and some LatAm bank ADRs (see Data Group 4) show high INSTAT and strong 1M.
Laggards: Big U.S. banks (JPM, BAC, WFC, C, MS) show negative 1M and deeply negative INSTAT, and insurers/asset managers like PGR, MRSH, KKR, APO, BX, SCHW, PYPL, COIN are in “distribution / risk‑off” regimes.
Technology and Communications.
Leaders: Semiconductor and hardware names like AMD, MU, ASML, AMAT, LRCX, TXN, TSM and enablers like Teradyne (TER), Microchip (MCHP) show Strongly Bullish INSTAT with very strong 1M; “AI hardware / capacity build‑out” leadership.
Laggards: Software and platforms such as INTU, CRM, SNOW, DELL, ADBE, ORCL, PLTR, PANW, MSFT, META, NFLX, SPOT, RDDT, PINS show negative 1M and negative INSTAT; “de‑crowding of high‑multiple growth.”
Key intra‑sector anomalies to tag
Extended leaders (Strongly Bullish, extended)
Energy:
Exxon Mobil (XOM), Enterprise Products (EPD), Williams (WMB), BP (BP), Shell (SHEL), TotalEnergies (TTE), Chevron (CVX), Exxon peers like CF Industries (CF) in Materials – INSTAT near 100 with strong 1M and 1Y; “pro‑risk cyclical leadership, extended – monitor for mean reversion.”
Materials:
CF, AA, CMC, STLD, NUE, RIO, BHP, Sherwin‑Williams (SHW), Reliance Steel (RS) – all post double‑digit 1M moves and INSTAT ~100; “cyclical reflation winners, extended.”
Industrials:
Caterpillar (CAT), Deere (DE), TransDigm (TDG), Quanta (PWR), LMT, NOC, GE, EMR, Vertiv (VRT), Waste Management (WM) – high IN, INSTAT in the high‑90s; “infrastructure/defence super‑trend.”
Health Care:
JNJ, LLY, AMGN, GILD, TMO, DHR, MRK, UNH – persistent positive 1M and INSTAT ~100; “defensive growth, crowded long.”
Consumer Staples:
CELH, MNST, ADM, PM, KO, COST, WMT – Strongly Bullish, extended with high 1M and 1Y; “staples momentum, yield plus growth.”
Technology / Semis:
AMD, MU, ASML, AMAT, LRCX, TXN – 1M >15–30% with INSTAT high‑90s; “AI hardware build‑out, extended – watch for exhaustion spikes.”
Deep laggards / structural risk (INSTAT ≤ −80)
Utilities/REITs:
American Water (AWK), PG&E (PCG), Crown Castle (CCI), SBA (SBAC), AvalonBay (AVB) – INSTAT between −80 and −100 with weak 1M; “rates‑sensitive structural laggards, ongoing distribution.”
Consumer names:
Target (TGT), Best Buy (BBY), Campbell’s (CPB), McCormick (MKC), KDP, Kraft Heinz (KHC) – negative 1M and deeply negative INSTAT; “staples/retail de‑rating, margin and growth concerns.”
Health Care:
Baxter (BAX), Hims & Hers (HIMS), Illumina (ILMN), Pfizer‑adjacent laggards – INSTAT near −100 for BAX/HIMS; “structural repair and sentiment capitulation.”
Financials/Fintech/Crypto:
Progressive (PGR), Marsh & McLennan (MRSH), KKR, APO, BX, HOOD, COIN – negative 1M, INSTAT ≤ −80; “risk‑asset and alt‑risk de‑crowding.”
Technology/Internet:
INTU, CRM, ADBE, ORCL, SNOW, PLTR, PANW, MSFT, META, NFLX, SPOT, PINS, RDDT – negative 1M and negative INSTAT; “growth de‑rate / AI trade fatigue.”
Potential contrarian ideas
Consumer / Staples contrarian:
Campbell’s (CPB), McCormick (MKC), Target (TGT), KDP – Negative INSTAT and weak recent returns after long drawdowns, but stable business models; “Contrarian watch – negative AT/ST but improving value case; monitor for 1M turn‑up.”
Financials:
JPM, BAC, WFC, C, MS, SCHW – negative INSTAT and weak 1M, but 1Y and franchise quality remain solid; “Contrarian watch – negative sentiment vs strong capital positions; look for stabilization in spreads and vols.”
Technology / platforms:
MSFT, META, ORCL, INTU, CRM – negative 1M and INSTAT, but strong 1Y and dominant franchises; “Contrarian watch – position trimming rather than thesis break; re‑entry candidates on volatility.”
REITs / Towers:
CCI, SBAC, American Tower (AMT), data‑center REITs like DLR, EQIX – mixed INSTAT profiles with rates overhang; “Contrarian watch – fundamentals intact, but rate path still the key trigger.”
Analysis of Capital Flows in Canada (Slice 13)
The Canadian US‑traded cohort shows a constructive, risk‑on skew, with multiple large caps posting strong 1M and 1Y returns alongside high IN and INSTAT, particularly in energy, materials, and financials. Names like Celestica (CLS), Bombardier (BDRBF), Canadian Natural Resources (CNQ), Suncor (SU), Cenovus (CVE), Imperial Oil (IMO), Cameco (CCJ), Franco‑Nevada (FNV), Teck (TECK), and Nutrien (NTR) all show Powerful bullish configurations, with INSTAT often in the 90–100 range and double‑digit 1M moves. Banks and insurers (RY, TD, BMO, BNS, CM, MFC, SLF) are more moderate but still positive on 1M and 1Y in many cases, suggesting steady accumulation rather than aggressive beta buying.
Breadth is strong in cyclicals and real‑asset exposures: the energy complex (CNQ, SU, CVE, IMO, ENB, PBA, TRP) and miners (AEM, WPM, FNV, KGC, TECK, CCJ) exhibit positive multi‑period returns with high INSTAT, signalling a robust global‑commodity and uranium/precious‑metal bid. Industrial and infrastructure names like Canadian Pacific Kansas City (CP), Canadian National (CNI), Waste Connections (WCN), Brookfield (BN, BAM), and Restaurant Brands (QSR) show mixed signals, with some in repair (CP, WCN, BAM) and others in steady uptrends (BMO, BNS, QSR). The main laggard is Lululemon (LULU), which shows deeply negative 1Y and strongly negative INSTAT alongside negative 1M and 1W, indicating a severe de‑rating despite being a high‑quality franchise.
Canadian leaders and laggards
Clear leaders.
Celestica (CLS): Strong 1Y (>150%), positive 1M and 1W, high IN and INSTAT ~50; “high‑beta tech/industrial leadership with strong momentum.”
Bombardier (BDRBF): Strong double‑digit 1M and very strong 1Y (>200%), INSTAT high; “cyclical aerospace recovery, momentum‑driven.”
Canadian Natural Resources (CNQ), Suncor (SU), Cenovus (CVE), Imperial Oil (IMO): Strong 1M and YTD, INSTAT high‑90s/100; “energy complex leadership, extended.”
Cameco (CCJ), Franco‑Nevada (FNV), Wheaton (WPM), Agnico Eagle (AEM), Kinross (KGC): High INSTAT with double‑digit 1M and strong 1Y; “precious metals/uranium super‑trend.”
Clear laggards.
Lululemon (LULU): Strongly negative 1Y (around −50%), negative 1M and 1W, INSTAT near −99; “structural de‑rating / sentiment capitulation.”
Brookfield Asset Management (BAM) and CGI (GIB): Negative 1M and 1Y with negative INSTAT; “financial/IT laggards in extended repair.”
CP, WCN, TU: Mixed to negative INSTAT and weaker 1M, despite stable franchises; “defensive hold/underperformers, not yet in full leadership.”
Key Canadian anomalies to tag
Extended leaders
Canada – Celestica (CLS).
Strongly Bullish, extended – INSTAT ~50 with very strong 1Y (>150%) and positive 1M; high‑beta tech/industrial winner, monitor for blow‑off risk.
Canada – Bombardier (BDRBF).
Strongly Bullish, extended – INSTAT ~78 with double‑digit 1M and >200% 1Y; aggressive cyclicality, susceptible to sharp mean reversion.
Canada – Canadian Natural Resources (CNQ), Suncor (SU), Cenovus (CVE), Imperial Oil (IMO).
Strongly Bullish, extended – INSTAT ~96–100, strong 1M and 1Y; energy complex leadership in Canada.
Canada – Cameco (CCJ), Franco‑Nevada (FNV), Wheaton (WPM), Agnico Eagle (AEM), Kinross (KGC).
Strongly Bullish, extended – INSTAT high, with strong 1M and triple‑digit 1Y for some; uranium/gold complex in momentum regime.
Deep laggards / structural risk
Canada – Lululemon (LULU).
Strongly Bearish – INSTAT ≈ −99 with negative 1M, 1W, and very weak 1Y; ongoing distribution and structural re‑rating.
Canada – Brookfield Asset Management (BAM), CGI (GIB).
Bearish/Repair – negative INSTAT with weak 1M and 1Y; persistent selling pressure in asset‑manager/IT services.
Potential contrarian candidates
Canada – Lululemon (LULU).
Contrarian watch – price deeply de‑rated with extremely negative INSTAT; any stabilization in 1M could signal early bottoming after capitulation.
Canada – CP, WCN, TU, ENB, TRP.
Contrarian watch – mixed INSTAT and softer 1M despite solid franchises; “quality hold” names that could lag in risk‑on but offer catch‑up potential on volatility.
Canada – Brookfield Corp (BN), Brookfield Asset Management (BAM).
Contrarian watch – negative INSTAT with modestly improving 1M vs long 1Y drawdowns; early signs of repair in alternative‑asset exposure.
Analysis of Capital Flows in Mexico and South America (Slices 14–15)
The Mexican and South American US‑traded cohorts show strong, broad‑based bullish profiles, with many names posting double‑digit 1M gains, powerful 1Y performance, and INSTAT in the 90–100 range. In Mexico, airports (ASR, PAC), consumer staples/food (GRBMF, KOF, FMX, BIMBO), and building materials (Cemex, CX) are clear leaders, with robust 1M and 1Y returns and INSTAT in the high‑90s to 100, signalling persistent institutional accumulation. America Movil (AMX) shows a more moderate but still positive trend, with stable 1M and 1Y returns and elevated IN.
South America (primarily Brazil, Chile, Peru, Argentina) exhibits an even more aggressive risk‑on profile: Petrobras (PBR), Ambev (ABEV), Itau (ITUB), Ecopetrol (EC), Santander Brasil (BSBR), Credicorp (BAP), Telefonica Brasil (VIV), Banco de Chile (BCH), Banco Bradesco (BBD), Santander Chile (BSAC), LATAM Airlines (LTM), Embraer (EMBJ), and Gerdau (GGB) all show high INSTAT and strong 1M and 1Y performance. Many have 1M moves in the high single‑ to mid‑teens and 1Y returns above 50–100%, signalling a strong EM/LatAm carry and growth trade. The primary outlier is MercadoLibre (MELI), which shows only modest recent performance and a deeply negative INSTAT despite a still‑solid franchise, indicating de‑crowding of a prior high‑multiple winner.
Leaders and laggards – Mexico and South America
Mexico – clear leaders.
Wal‑Mart de Mexico (WMMVF), ASR, PAC, FMX, KOF, CX, Grupo Bimbo (GRBMF): strong 1M and 1Y with INSTAT high‑90s to 100; “consumer and infrastructure leadership, EM staples trade.”
America Movil (AMX): positive 1M and strong 1Y with INSTAT >80; “defensive telecom/infra with growth kicker.”
Mexico – laggards.
None with structural deep negative INSTAT within this slice; relative laggards are those with smaller 1M vs peers (e.g., AMX vs airports/staples) but still constructive.
South America – clear leaders.
Brazil/Andean banks: ITUB, BSBR, BBD, BSAC, BCH – high INSTAT with strong 1M and 1Y; “financials leadership, EM credit spread compression.”
Energy and utilities: PBR, EC, Eletrobras (AXIA), SABESP (SBS) – strong 1M and high‑double‑digit 1Y moves, INSTAT ~100; “energy/utilities carry and reform trade.”
Consumers and infra: ABEV, VIV, LTM, EMBJ, GGB – robust 1M and 1Y with very high INSTAT; “broad EM consumer and industrial cyclicals leadership.”
South America – laggards.
Suzano (SUZ): Positive but more moderate 1M and slightly negative 1Y; “materials name lagging broader rally, in repair.”
MercadoLibre (MELI): Modest 1M and low‑single‑digit 1Y, with INSTAT around −80; “high‑multiple e‑commerce growth de‑rated despite EM tailwinds.”
Key anomalies in Mexico and South America
Extended leaders
Mexico – ASR, PAC, CX, GRBMF, KOF, FMX.
Strongly Bullish, extended – INSTAT ~97–100 with solid 1M and strong 1Y; “Mexican consumer/infra leadership, extended trend; monitor for EM risk‑off squeezes.”
South America – ITUB, BSBR, BBD, BSAC, BCH, EC, PBR, ABEV, VIV, AXIA (Eletrobras), SBS, LTM, EMBJ, GGB.
Strongly Bullish, extended – INSTAT ~98–100 with strong 1M and 1Y; “LatAm banks, energy, and infra as core EM leadership cluster.”
Deep laggards / structural risk
South America – MercadoLibre (MELI).
Strongly Bearish/Repair – INSTAT ≈ −80 despite modest positive 1M/1Y; “crowded e‑commerce/growth name under distribution; valuations re‑rating.”
South America – Suzano (SUZ).
Bearish/Repair – slightly negative 1Y with only moderate 1M, INSTAT lower than peer leaders; “materials laggard vs EM beta, still in repair.”
Potential contrarian ideas
South America – MercadoLibre (MELI).
Contrarian watch – negative INSTAT and muted 1M in the face of strong regional EM beta; a turn‑up in 1M with improving IN could mark re‑engagement in quality growth.
South America – Suzano (SUZ).
Contrarian watch – lagging materials name relative to LatAm banks/energy; any broadening of EM reflation beyond financials could pull SUZ into leadership.
Mexico – AMX.
Contrarian watch – positive but less explosive than airports/staples; stable telecom cash flows could attract rotation if high‑beta EM names correct.
Excellent framing of the rotation dynamics. The laggard identification here is crucial because it distinguishes between structural weakness versus tactical profit-taking. Tech and Financials showing negative short-term momentum despite strong one-year gains suggests distribution rather than a broken thesis. I've noticed that when former leaders turn laggard this abruptly, the mean reversion window is usualy narrow, so timing entry on volitility is tricky but high-reward.