Here's what is happening. The best stocks are going down on great numbers. That means the money that took us up did not know anything but momentum. The really big portfolio managers need the market to fall because they are failing to beat their benchmarks. At the same time, the employment number puts to an end the fear the graybeards had that the curve will invert. Man, I hate those guys. They are so ivory tower.
Now when you see this kind of rotation, you must know it isn't for real. This is just random portfolio managers saying this is my chance to buy the industrials and the banks.
The problem is that they are weak leaders. Sure, 2021 could be better than 2020. But that's ages from now as far as I am concerned.
A more realistic way to look at it is through the prism of the election. The Democrats are hoping that no stimulus cuts their way. The Republicans the same. Meantime, the employment number says Trump. The old timers fear that 2021 can't be better than 2020 if Biden wins. So the stakes just got higher, given that Biden favors a big revision up in corporate taxes.
In the meantime, the hot money is trying to save Tesla (TSLA) . But if they can't, then the money may leave to go to a different gambling table -- perhaps the NFL, suggests my writing partner Matt Horween.
No matter, it's hard to rally on a Friday before a holiday.
Please heed what we are saying inAction Alerts Plus. I think we've been very spot on.