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A Staples store display in New York is seen in this file photo.Shannon Stapleton/Reuters

If that's it for the stock market selloff, what's the rebound going to look like?

The S&P 500 rose 15 points or 0.8 per cent on Monday, after sliding a combined 56.5 points at the end of last week in a selloff that hit some of the hotter stocks particularly hard.

The bounce dispels some concerns that last week's turbulence was the start of a protracted downturn or the end of the five-year bull market in stocks. But according to Goldman Sachs, the move back up won't simply reverse the previous losses and reward last week's biggest casualties.

Strategist David Kostin looked at 46 market dips since 1980 where so-called momentum stocks – the best-performing names over the previous 12 months – led the way down. Over the past month, momentum stocks have fallen by an average of 7 per cent, versus a historical average dip of 10 per cent over a six-month period. This implies that, based on previous moves, the worst is likely behind us.

But, more important, the subsequent rebound tends not to reward the momentum stocks that had been hit the hardest, which is a problem if you're expecting big rallies from the likes of Facebook Inc., Amazon.com Inc., Gilead Sciences Inc. and Netflix Inc.

"Whenever the drawdown ends, momentum typically does NOT resume leadership," Mr. Kostin said in a note. "The best performing stocks during the 12 months leading up to the start of the drawdown do not subsequently outperform."

Instead, low-valuation and low-growth stocks tend to lead the rebounds, even if their performance over the previous 12 months has lagged. Some of the current standouts include Bed Bath & Beyond Inc., Staples Inc., Wal-Mart Stores Inc., Transocean Ltd., Chevron Corp, ADT Corp., Teradata Corp. and FirstEnergy Corp. – all of which have been disappointments over the past year but are now poised to take the spotlight.

Mr. Kostin's argument fits in with a broader theme among market watchers that the current bout of volatility has less to do with an exit among investors and more to do with a rotation into new areas of the market.

"We believe that the recent meltdown in the 'momentum' stocks, i.e., the ones that had been soaring over the past couple of years to excessively high valuations, reduces the risks of a broader melt-up followed by a more severe meltdown," said Ed Yardeni, chief investment strategist at Yardeni Research. "If so, then it's actually a positive development for the longevity of the secular bull market."

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