People are selling FCF generators and dumping the cash into most down stocks YTD. This is abundantly clear. Looking at growth names down more than 40% for the year gives us a pool of stocks 150 deep and they’re up 11% the past month.
Some of the more notable names include: META, PYPL, NFLX, TEAM, SQ, SHOP, SE, WDAY, ILMN, and ALGN. The median loss for these stocks is -55% YTD.
So when you put those losses into perspective and then cast a curious eye on the 11% gains the past month, one should be suspicious that the recent rally is and could be anything but a dead cat bounce. We are now led higher by cash burning biotechs — because markets are trending up and perhaps the market is suggesting capital markets could reopen for these cash starved scam artists.
For the session, the pool of stocks I mentioned above are down 1%.
Losses are led by RVLV, YETI, and CROX — all consumer names.
In summary, the market has been rotating out of oils and into consumer names based on the idea that the economy isn’t so bad. However, all of the consumer oriented names are now getting DRILLED after reporting WORSE THAN EXPECTED earnings.
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