From Dark Red to Bright Green
A chaotic week shows a clear rotation out of the Magnificent Seven, but inconsistent inflows into other areas.
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The market had a very chaotic week with a huge end-of-the-month markup in the last 30 minutes of trading on Friday. There wasn’t any news, but the S&P 500 went from dark red to bright green after an abysmal day.
Even with the big rebound at the finish, there was more mixed action in the indexes and more rotation out of big-cap technology stocks. The DJIA DIA led on Friday after it recovered from the carnage created by Salesforce CRM, while the Nasdaq 100 QQQ had another red day as Amazon AMZN and Nvidia NVDA stayed in negative territory.
Small-caps IWM have been the highlight all week and finished on Friday with a gain of 0.9%. Breadth was around 2 to 1 positive, mainly due to the little guys.
The inflation data that was much anticipated came in a little softer than expected, but the market didn’t care much. The main market drivers appear to be positioning and rotation rather than the economy. There is a clear rotation out of the Magnificent Seven, but inflows into other areas are bumpy and inconsistent.
Next week, we have economic news to consider, but there is nothing on the earnings front. The big question is whether there will be an extension of the rotation action.
One thing I will be looking at is the rebalancing of the Russell 2000, which takes place at the end of the month. There should be some new candidates for inclusion that will be of interest.
It has been a good market for stock pickers lately, and I’m hopeful that it will continue.
Have a great weekend. I’ll see you on Monday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
