≈ Cyclicals Return≈
Mega-cap tech had been leading. The likes of Facebook, Apple, Amazon, and Microsoft ramped into this month’s earnings reports. But this week, they cooled. Only slightly, yes, but cool nonetheless. But did that kill the market? No.
Instead, as they’ve been prone to do for months now, buyers simply went elsewhere. This time, they found a new home in cyclical areas. Basic materials (see XLB and XME) were perhaps the biggest beneficiary yesterday. But energy stocks and homebuilders participated. The rotation also boosted small-caps which have now outperformed for a few sessions.
This morning’s down open after Amazon’s overnight earnings selloff will be the next test to see if investors ring the register on everything or keep shuffling from tech to other areas.
Sector rotation is the lifeblood of a bull market. Therefore, these movements should be celebrated and embraced.
Chart of the Day
Metal & Mining ETF Pops
XME is my go-to ETF for metal & mining stocks. They’ve been part and parcel of the reopening trade. Yesterday’s feature of Nucor’s imminent breakout was spot-on. The boom in steel stocks is part of what boosted XME. Most of the funds holdings are small-caps, so a continued rise will aid in the Russell 2000’s recovery attempts.
Video of the day
Buy One, Hold One, Dump One
Coach Greg analyzes 3 stocks from the Mining industry – Souther Copper, Freeport McMoran, and Newmont Minning – and asks the coaches which one they would Buy, Hold, and Dump, in this segment from Thursday’s Halftime Report
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