Friends
If you happen to check in at 3:00 to see how stocks did for the day you may be under the impression that it was a quiet day. Au contraire mes amis et amies. It was a day of massive rotation, as the high flying momentum stocks saw air let out of their bubble, and some recently left behind sectors like energy and financials rallied. The Nasdaq index, which contains those lofty momentum stocks saw significant damage, at one time down nearly 3% (down 1.80% at the close), after it had hit a new all-time high in early morning trading. Traders have been clamoring for volatility. Well, we got some today.
For the day, the Dow Jones Industrial Average was up 89 points to close at 21,271. The S&P 500 was down 2 points to finish the day at 2,431. Gold was down $10 to trade at $1,269 per ounce, while oil was up $.23 to trade at $45.87 per barrel WTI.
Now, one school of thought would be that it’s not a bad thing to see some rotation from overpriced sectors to one’s that are presumably undervalued. Bull markets are often built on rotation as one sector takes the baton from another. Another school of thought, however, might say that you don’t want to lose your leaders in a bull market. Amazon, Apple, Netflix, Facebook, Google and the like have been the leaders. If they falter, does that signal that the end of this bull market move is at hand? Well, one or two days of action is not necessarily definitive, but it sure gives us something to think about over the weekend. Remember, next week we have a Fed meeting. Stay tuned.
Have a great weekend everyone.
