Tags: stock | market | rotation | correction

Chantico Global's Sanchez: Stock Market's Rotation May Turn Into Correction

By    |   Friday, 16 May 2014 01:54 PM

Investors are rotating to value stocks from growth stocks, and that move could translate into a correction for the broader market, says Gina Sanchez, founder of Chantico Global, a money management firm.

TrimTabs Investor Research reports a "massive" move to value stocks from growth stocks. Since the beginning of April, growth-stock exchange-traded funds redeemed $5.6 billion, while value-stock ETFs issued $3.9 billion, according to TrimTabs.

Sanchez says the rotation will persist.

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"All of the defensive sectors have performed quite well this year," she told CNBC/Yahoo Finance. "A lot of the highfliers and momentum stocks have just gotten destroyed. That's going to continue."

For example, Twitter has dropped 50 percent since Feb. 4.

Sanchez sees the rotation more as a move to jettison momentum stocks than to snap up value stocks. And that's not good news for the market as a whole.

"I think this defensiveness is going to continue," she said. "We could actually see a correction in the market as a result of that continued concern."

Experts say disappointing economic and earnings growth so far this year have led to investors' defensive moves. GDP expanded just 0.1 percent in the first quarter.

"Some of the assumptions we had coming into the year, like strengthening growth and improved revenue, haven't come through at the pace we expected, which is why you're seeing a rotation from small growth names into value and defensive ones," Oliver Pursche, president of Gary Goldberg Financial Services, told Reuters.

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Investors are rotating to value stocks from growth stocks, and that move could translate into a correction for the broader market, says Gina Sanchez, founder of Chantico Global, a money management firm.
stock, market, rotation, correction
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2014-54-16
Friday, 16 May 2014 01:54 PM
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