Is the rotation over? It's pretty early in the day and I usually like to see if there is any margin-call selling in the early afternoon, but the one thing that is really on target is that we had a very big dip in the Nvidias (NVDA) and Facebooks (FB) of the world right before the opening, which cleansed things. And then we saw declines in the retailers, which is excellent, given there was so much selling in tech to get into them.
It is vital for people to realize the consequences of a rotation without new money in. There simply is no way that a rally in finance, retail and telco can be financed from cash on hand. It has to come from somewhere else -- like Alphabet Inc (GOOGL) or Lam Research Corp (LRCX) or Nvidia.
Now the difficult thing is to figure out who is doing well enough in tech that you want to go back to it. My choices are Nvidia, Microsoft MSFT, Alphabet and Facebook -- which is what we are looking at or own for Action Alerts PLUS. I would add Broadcom (AVGO) , but it reports tomorrow and it is involved with Qualcomm (QCOM) , which means that it is convoluted.
Why not Apple Inc (AAPL) ? Because Apple remains low-multiple, and it is the high-multiple stocks that bear the brunt of things. Why not Amazon.com Inc (AMZN) ? Because I think that people are still trying to figure out if the Death Star is as powerful as it used to be. Watch Advance Auto Parts (AAP) as a tell, something I suggested should be bought at the Deal Economy conference. This is a fulcrum day; if tech finishes up then we know the sellers are done.
That's why we bought some this morning for Action Alerts Plus. But if the mid-afternoon downturn materializes and the selling accelerates, then we will be at an interesting and, I think, treacherous moment.