Is The Great Rotation upon us?

Or is this the umpteenth head fake of 2017?

I am talking about the transition of the market focus from technology growth stocks to reflationary value stocks, which some analysts have been predicting, too soon, since January.

You can be forgiven for anticipating such a shift ahead of time.

After all, the leading FANG stocks, (FB), (AAPL), (NFLX), and Alphabet (GOOG) have all been on a meteoric tear for six months, and are still up close to 40% this year.

However, the sector has close to a monopoly on long-term organic growth, no debt, giant cash hoards, and is engaging in massive share buybacks.

It has all been enough to keep institutional investors paying up, at least until now.

I have to admit that even I, the greatest technology bull of all time (after all, it is imprudent to speak ill of your neighbors) have recently been getting a little jittery.

My existing put spread in the United States Treasury Bond Fund (TLT was already doing some of my work for me and was paying off handsomely.

I slapped on a vertical bear that put spreads for Apple (AAPL) and Facebook (FB), turning my call spreads into iron condors.

I added another put spread for the S&P 500 (SPY) in case the entire market starts to roll over.

I stopped out of a high beta long position in Biogen (BIIB) that fell on the back of the Senate’s failure to pass a health care bill.

And for good measure, I added a position in Goldman Sachs (GS ) in the event that the Great Sector Rotation ensues without warning, which it eventually will.

After six months of hibernation, I think the banks are about to make a move.

Along in Goldman Sachs would be a nice hedge against any such rapid sector rotation.

As our profitable short position in the US Treasury bond market (TLT) is screaming at us, the bond market may have peaked for the year last week, and financials love rising rates.

Banks also passed their annual stress test with flying colors. They are now well capitalized enough to handle TWO 2008 type financial crisis.