Market's Message: The Tide Is Turning Bullish, Says Plexus' Prieur du Plessis

Updated from 4:12 p.m. EDT 

There was a general sense of optimism this weekend in San Diego, where I attended a hedge fund conference and separate tribute dinner for newsletter legend Richard Russell.

Among those in attendance - and feeling at least cautiously optimistic - was Prieur du Plessis, noted blogger and executive chairman of Plexus Asset Management, a South African-based firm with about $2 billion of assets.

The market's message is "the tide is turning," says Plessis, who cited the same valuation argument as BCA's Martin Barnes as well as these recent trends:

• Outperformance of small-caps stocks over large.
• Strength in growth-oriented sectors like tech, basic materials and consumer discretionary.
• Strength in commodities and emerging market stocks.

These are the kind of signs "only would typically expect at a bottom," says Plessis. Even if the recent rally - over 20% for the Dow and S&P in the past four week - is a case of "too much too fast," the money manager believes the S&P has established a new trading range between the March lows (666) and January highs (935).

While the global economy remains "murky" and America's banks the "elephant in the room," Plessis believes a "bottoming area" has been established. He expects emerging markets, notably China and resource-rich nations like Brazil will continue their recent outperformance.

Update: On any near-term pullbacks, Plessis recommends investors play this "reflation" trade via ETFs including:    

• China: iShares FTSE/Xinhua China 25 Index (FXI)
• Brazil: iShares MSCI Brazil Index (EWZ)
• India: iPath MSCI India Total Return Index ETN (IPN)
• Materials: iShares S&P Global Mat. Sector (MXI)
• Gold: SPDR Gold Trust (GLD)  and Market Vectors Gold Miners (GDX)
• T.I.P.S.: iShares Barclays TIPS Bond Fund (TIP)

 "I suspect this is a trade that will be perpetuated over the next few years," he says.

Editor's note: Stay tuned later this week when we'll publish our exclusive interview with Richard Russell, who is not so favorably disposed - as anyone who's followed his recent work knows.