The stock market has been flipped completely upside down

Take everything you thought you knew about the stock market this year and throw it out the window.

After eight months of tech and healthcare dominance, the record-breaking S&P 500 has assumed a fresh new face in September, being instead led higher by energy and telecom shares.

The resilience shown by the S&P 500, which just last week hit a series of new record highs, goes a long way towards disproving the notion that the stock market is trading at the whim of the tech industry. That’s good news for bullish traders, and a comeuppance of sorts for sceptics that warned against a market reckoning in the event of tech weakness.

As the scorching-hot FANG stocks — Facebook, Amazon, Netflix and Google — have headed toward correction territory this month, energy producers have stepped up and largely filled the void, aided by a surge in crude oil prices.

Spx sectorsBusiness Insider / Andy KierszThe best-performing sectors year-to-date through August have mostly faltered in September.

The rotation occurring underneath the surface of the S&P 500 this month — out of tech and into other more attractively-priced areas — has played out on a smaller scale a few times in the past several months. On multiple occasions, exchange-traded fund data has supported the idea that money pulled from tech has simply been reallocated elsewhere in the stock market, keeping indexes afloat.

“Sector rotation has been a defining characteristic of equity markets throughout the spring and summer,” Fundstrat Global Advisors technical strategist Robert Sluymer wrote in a recent client note.

This dynamic has also been in play outside the confines of sectors. Looking strictly on a return basis, the top 20% of stocks in the S&P 500 in 2017 through August have evolved into the worst-performing quintile in September. On the flip side, the bottom 20% from the first eight months of the year is now the top quintile this month.

And records are being hit all the while — just the latest impressive sign of resilience for the 8 1/2-year bull market that refuses to die.

Spx quintilesBusiness Insider / Andy KierszThe best-performing S&P 500 stocks through August have been the worst in September. The inverse is true for the worst performers.

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