Tuesday was a solid session, but the sloppy close saw sizable chunks of gains evaporate from the Dow Jones Industrial Average and the S&P 500. The market saw re-rotation back into the former high-flyers, which swelled Consumer Discretionary and Technology, while four sectors stumbled.
S&P 500 Index | +1.42% | |
Communication Services XLC | +1.12% | |
Consumer Discretionary XLY | +3.78% | |
Consumer Staples XLP | -0.09% | |
Energy XLE | -1.75% | |
Financials XLF | -0.91% | |
Health Care XLV | +0.59% | |
Industrials XLI | -0.41% | |
Materials XLB | +0.62% | |
Real Estate XLRE | +1.13% | |
Technology XLK | +3.40% | |
Utilities XLU | +1.32% |
The Retail Revolution
Yesterday, we learned that the retail investor is now the number two source of daily volume in the stock market. This remarkable development is all the more astonishing, as the elites thought they were dancing on the graves of Reddit traders and others. As for yesterday’s winners, these folks are moving a lot of stocks under the radar of the media.
Symbol | Change | Volume (million) | Average Vol (million) |
EARS | 52.05% | 58.2 | 1.8 |
CAN | 50.45% | 40.1 | 15.8 |
SOL | 36.30% | 7.2 | 4.9 |
RIOT | 33.81% | 35.4 | 33.4 |
EYES | 31.52% | 105.4 | 19.6 |
GME | 26.94% | 38.3 | 41.8 |
Consider AgEagle Aerial Systems (UAVS), up 22.59% yesterday to $7.65, and the 52-week low is $0.19.
The Big Boys & Girls Had Fun, Too
The headlines have been about the NASDAQ Composite drubbing and tumbling into correction territory. However, as I have been saying and writing all along, this has been about those gargantuan winners giving back a ton of their gains, while most are still substantially higher for the year.
Consider on February 9, there were 818 NASDAQ winners, up an average of 21.3%; yesterday, there were 636 NASDAQ winners, up an average of 22.4%.
However, on February 9, the top 20 NASDAQ winners were up an average of 145.0%. One week ago, it was just 91.3%, but yesterday it rebounded to 106.9%.
This all points to the rapid pace of investors chasing performance. It also means quickly bailing out of yesterday’s hot stocks. It’s like playing musical chairs. But just be careful not to get whipsawed and take the unnecessary losses because the music has shifted.
To see the chart, click here.
Portfolio Approach
We added to Consumer Discretionary yesterday and sold an Industrial position in the Hotline Model Portfolio. We also add back some names to the Buy list that we were holding.
Today’s Session
In addition to another round of stimulus, do not underestimate the pace of the Covid-19 vaccine rollout. Despite media reluctance to cover it positively, American ignited the race for vaccines. And we came out of the gate with strong distribution, which recently took back the lead from the United Kingdom.
To see the chart, click here.
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