The high beta momentum plays are being sold hard today, namely $CRM $FFIV $NFLX $AKAM $PCLN. There are countless other cloud computing and data storage plays that are getting whacked on the back of $EQIX‘s big earnings miss last evening. Despite the blood on the street in many of those momo names, the market has more or less been flatlining all day.
With the huge rally that we saw yesterday, it would be easy to assume that the high beta plays rolling over today would mean a down 3% day on the senior indices. Instead, we are seeing capital simply rotating out of the high-flyers and into other areas, such as energy, financials and materials.
This is a huge change in character from the market action that we saw over the summer, where we would see two or three weeks of strong risk appetite, followed by several weeks of complete risk aversion. That kind of broad market analysis, done as objectively as you can, is what I am referring to when I urge you to trade what you actually see, not what you would like to happen.
Many bears who have missed or fought the move up from 1040 on the S&P are happily cherry picking the glaring weakness in the high beta names today as evidence that we are topping out. If that weakness had spread to the broad market, I would probably be inclined to agree with them.
However, thus far it has not, and therefore I do not agree with them.
Holding our collective breath til you tell us what you’re buying on the lunacy
very OT -I am shopping for a neat old wood chess set – weighted pieces, king 5″ height – need it for display on old chess table – – where’s a good place to shop for this stuff? thanks! Figure I’d ask the guru
ha–I usually just use Amazon or EBay, as quaint as that sounds.
Excellent!
Sector rotation into energy has not gone over well this year
You got that right. It seems the Jan high and the April high were both marked when oil / energy stocks reached their peaks. We shall see if that repeats again this time.
The best overall market analysis I could possibly do is simply read your blog. 🙂
No shit!
Fantastique, as always.
agreud.