With the year winding down, I thought today would be a fitting time to take a look back at 2007, and figure out where 2008 may be leading us. As always, a picture is worth a thousand words. So, for today's TrendWatch, we'll take one last look at a percentage-change chart for all the major trading segments: style, cap, sector, and geography. By looking at where the trends are - and where they're turning- we can tweak our portfolios for the coming year.

Style & Cap

Small cap-value got destroyed, while mid-cap growth led the way. Take a closer look though; notice that growth clearly beat value in all three market cap groups. As the Fed gets more friendly, I look for growth to remain dominant. I also look for mid-caps to stay ahead of the pack. On the other hand I have to confess the small cap value stocks have me curious. It's not a matter of 'if', but one of 'when' they recover, and they've got a ton of room to recover.

Style & Cap - Percentage Change, 2007 YTD



Sector

Can basic materials continue at this blistering pace? Can financials get out from under the burden of its own weakness? Can energy stocks keep going higher? I think the answer to all three questions is 'yes'.

Normally I'd suggest selling when the market is strong, and buying when the market is weak. In many of these cases though, I don't necessarily see the trends changing course just yet. I do think we could see a major shake-up sometime in 2008, but right now I look for this basic scheme to be sustained. Like I said though, the financial stocks look like huge values right now - the question is one of timing.

My bullish sleeper for 2008 is telecom; my bearish one is transportation. Be sure to check out next week's TrendWatch for more sector stuff.

Sector - Percentage Change, 2007 YTD



Region

If you're only trading U.S. stocks, you're missing (almost) an entire world of opportunities. Brokerage firms are adding international trading to their offer at a decent pace, and ADRs are always a possibility. Or, a country-specific ETF is a completely painless way to get some overseas exposure. Whatever works best for you may be worth studying, and here's why: a lot of overseas markets just plain-old crushed U.S. stocks.

Latin America, Canada, Malaysia, and others did much better than the S&P 500's 4.1% gain (as of Friday). Even if you're a 'long only' investor, the opportunity is clear.

Based on the percentage-change chart below - plus a handful of other factors - I think Latin America still holds a lot of potential for 2008. I also think Canada is coming on strong. A few weeks ago I mentioned Japan was looking like an undervalued idea as well. Though they haven't really gotten traction yet, I still feel the same - they can't stay beaten up forever.

As for weak spots, Australia's multi-year dominance finally seems like its' buckling. The Netherlands and South Africa also looks like they're pointed in the wrong direction right now (though both can turn on a dime).

My bullish sleeper here is the United Kingdom.

Region - Percentage Change, 2007 YTD



As always, take everything with a grain of salt. Nobody has a crystal ball, and things change daily. On the other hand, sometimes things really are the way they seem, and you have to take that at face value. Those are the biggest of the 'big trends'...no pun intended. Hopefully you can use some of our thoughts above to turn those big trends into big money.

Price Headley is the founder and chief analyst of BigTrends.com.