facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog external search brokercheck brokercheck Play Pause
What Happened In Q1 2021? Overman Capital Shares Some Perspective Thumbnail

What Happened In Q1 2021? Overman Capital Shares Some Perspective

College Planning Investing Retirement Funding Insights

Monday, April 19th, 2021

The first quarter of 2021 is officially in the books and all three major US large cap indices – the S&P 500, Nasdaq Composite, and the Dow Jones Industrial Average – finished the quarter in positive territory. In a juxtaposition of leadership from 2020, it was the Dow leading the way with a gain of 7.76%, while the Nasdaq lagged, returning 2.78%, and SPX finished in the middle, up 5.77%. However, as in the prior quarter, small caps once again outpaced large caps as the Russell 2000 Index gained more than 12%.

While the first quarter was not particularly volatile, especially compared with the same time last year, there was quite a bit of shuffling, nonetheless. After leading the domestic equity relative strength rankings in our Dynamic Asset Level Investing (DALI) tool almost continuously for three-plus years, the technology sector surrendered its leadership and fell to fifth. DALI provides us with a heat map of where relative strength (and weakness) resides across and within asset classes. On the other hand, financials and energy climbed from near the bottom of the DALI sector rankings all the way to their current positions in the top three.

After underperforming for much of the last several years, value came back into favor, significantly outperforming growth in both the large and small cap categories. Meanwhile, following a fairly steady ascent in the final months of 2020, US Treasury yields accelerated dramatically in early 2021. The US Treasury 10-year Yield Index reached 1.75% in March after starting the quarter at under 1%, resulting in a challenging environment for long-dated US Treasuries and investment grade corporate bonds, which had been among the strongest areas of the fixed income market in 2020.

As the second quarter begins, the DALI asset class rankings favor equities with domestic equities and international equities occupying the top two spots. Many analysts have predicted strong domestic economic growth in 2021 thanks to accommodative fiscal and monetary policy, which would be a constructive environment for US equities. The domestic equity sector rankings point to an offensive or risk-on positioning in the market as the consumer cyclicals and energy sectors lead the rankings while the traditionally defensive consumer non-cyclical and utilities sectors sit at the bottom. We continue to monitor closely for any shifts in the market landscape.

If you have any questions about your portfolio or you would like to become more familiar with our investment process and the tools we use to identify market leadership across and within asset classes, please don’t hesitate to contact us.


Rob & Jay

P.S.  If you think this type of information would be beneficial to anyone you know, please share this update with them.

Overman Capital Management
331 Middle St.
New Bern, NC 28560
 252-635-6666 Office

 Securities and Advisory Services offered through Triad Advisors, LLC Member FINRA/SIPC. Overman Capital Management LLC and Triad Advisors LLC are not affiliated.


Please be aware that the content of this newsletter is based on the opinion of Dorsey, Wright research and may differ from the research provided by your financial advisor. This market theme letter was written by Dorsey, Wright & Associates and is provided courtesy of your advisor.

The performance numbers in this article do not reflect transaction costs.  Indexes are not available for direct investment. Past performance is not indicative of future results and there is no assurance that any forecasts mentioned in this report will be attained.

Stocks offer growth potential but are subject to market fluctuations. Dividends are not guaranteed; companies can reduce or eliminate their dividend at any time. There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact of varied economic conditions.

The information contained herein has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs.  Accordingly, investors should not act on any recommendation (express or implied) or information in this material without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions.  Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources believed to be reliable (“information providers”).  However, such information has not been verified by Dorsey, Wright & Associates, LLC (DWA) or the information provider and DWA and the information providers make no representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein.  DWA and the information provider accept no liability to the recipient whatsoever whether in contract, in tort, for negligence, or otherwise for any direct, indirect, consequential, or special loss of any kind arising out of the use of this document or its contents or of the recipient relying on any such recommendation or information (except insofar as any statutory liability cannot be excluded).  Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.  Neither the information nor any opinion expressed shall constitute an offer to sell or a solicitation or an offer to buy any securities, commodities or exchange traded products.  This document does not purport to be complete description of the securities or commodities, markets or developments to which reference is made.

Potential for profits is accompanied by possibility of loss.

The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy.

Check the background of this firm/advisor on FINRA’s BrokerCheck.