Are Active Managers Taking Money Off the Table?
It’s an NVDA market. NVDA’s volume has eclipsed activity in the next twenty names, while meme stocks pop and active manager exposure dips.
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Stop me if you’ve heard this before, but Nvidia has taken over the market.
I saw a statistic that NVDA’s volume on Thursday was higher than the next twenty stocks. In addition, volume in the market overall has tailed off significantly. We are back to April levels. I mean, Nasdaq traded just under five billion shares. A few short weeks ago, six and seven billion was typical.
But here’s what’s interesting. For the last few weeks, since NVDA began this recent uphill climb, most days that the stock is red everything else is free to rally. NVDA, as we’ve discussed before, seems to suck up all the energy in the market so when it goes down we tend to see better breadth, we tend to see the Russell rally. But that was not the case on Thursday. That’s something to watch. Has something changed?
Because we’re back to Gamestop and AMC being the two most active stocks. Maybe all the money that was available for the others in recent weeks now just goes into the meme stocks. Seems perfectly normal, doesn’t it?
There is something else that seems out of place in this market. Most of the sentiment indicators have barely budged in the last few weeks. Oh sure we’ve seen the bulls back off and the bears rise a smidge. But this week’s National Association of Active Investment Managers (NAAIM) saw their exposure down from the mid 90s to 66. That is quite a drop, especially with the market at new highs. To put that in perspective this was at 60 at the April low, after the market had been heading down for weeks.
Right now it is the only sentiment indicator that is showing such a change. Even if we look at the ten day moving average of the put/call ratio we can see it is still rising.
Then there are the Utes. They made a lower high while bonds have rallied and rates have made a minor lower low. They made a lower high while NVDA has soared to a higher high. I thought they were an AI play. Or a rate play, or at least that is what I was told.
I am still unsure if this will turn out to be a big sideways, but wide, correction in the Utes, but I can tell you that they have been the leader for rates in the last year so I am watching closely to see if 910 holds on the low end or if 960 breaks on the top end. I’m leaning toward the low end. The one thing I do know is that it has been weeks since I have seen anyone on television tell us how much they love the Utes.
