It was a solid rebound, although Utilities (XLU) and Financials (XLF) had a curious weakness.

Wall Street hates it when the “little guy” aggressively buys the stock market—they hate it even more than the so-called “little guy” crushes it. But that’s been the case for most of this rally, so it shouldn’t be surprising that retail investors poured into the market on Monday (see below) as the financial media screamed “fire.” Adding further insult to injury is the big short bet put on the market by macro hedge funds.

Yesterday’s session had to be infuriating for the most brilliant guys in the room as Palantir Technologies (PLTR) rocketed to the top of the winner list, and more institutions were forced to buy. 

Scoreboard:

• Dumb money started buying under $10.00
• Smart money started buying above $65.00, and many bought above $100.00 (yesterday)

There have been many false starts with small-caps, so there is no need to chase them. It all depends on rate cut sentiment shifting to more than three rate cuts.

Economic Data

Yesterday, job openings came in below the consensus and construction looked especially worrisome.

U.S. Services Purchasing Managers Index (PMI) came in above the consensus; however, ‘Prices’ erupted higher.

Economic data, including Friday's big jobs report, will be a major driver for the market for the remainder of the week.

After the close, Google (GOOG/L) was slammed but hiked its capital expenditures (capex) to $75 billion, which could help chip names. In addition, Advanced Micro Devices (AMD) was also getting pounded in after-hours trading.

Today’s Session

Keep an eye on semiconductors today.  These names have been mostly lower or sideways. 

Also, the US trade deficit hit $98.4 billion for December, bringing the full year to $918 billion. This will not make President Trump happy. Yes, it reflects a strong US economy (also lots of borrowing), but those are numbers that could be circulating in the United States.

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