Heading into tonight’s Presidential debates, we have a bullish tape, but bifurcated. There is now weakness in the large capped stocks and semis in favor of the smaller. The smaller companies are mostly domestic American companies, whereby the larger cap Nasdaq stuff are global.
This is not a rare divergence and we’ve seen the Russell crush the NASDAQ many times throughout history, just not recently. For the most part, when the dollar is weak it favors the multinationals, since they’re getting paid in appreciating currencies and the goods are cheaper. But we haven’t seen much of a move in the dollar. If anything it has been stronger.
Perhaps it’s a temporary blip, or perhaps the risk table is about to expand and include names that have been ignored. Either way, I closed very bullish with a 12% position in $TNA, but also hedged with a barbell position at 12% in $SQQQ, accompanied by a slew of longs. Within tech, there was rotation out from semis into software. You really need to keep on top of this stuff to know. Stocklabs is your friend and can help.
+17bps for the session, all going according to ze plan.
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