The market eked out a gain as each sector, except Consumer Staples (XLP), finished higher yesterday. The bottom fishing theme is becoming more prevalent on a sector and individual stock basis.

Meanwhile, the caboose is getting crowded. Only 24% of the S&P 500 (SPX) components are beating the index.

Value Perks Up

Value led the way across all sizes in yesterday’s trading.

Yesterday was one of the best sessions for “value” stocks over “growth” stocks so far this year, but the question remains: will it mark the beginning of something real or just a fleeting trend?  Money flows (MF) were reading oversold, so there could be more upside, without violating the downtrend. Every reversal must start somewhere.

Small-Caps

The S&P Small Cap 600 Index (SML) had another monster session with 90% of names higher, the day after 96% finished in the green.

Hedge funds had record short positions on the market and got their ‘heads handed to them.’ Now, they are back with a bet for the ages that small caps continue to suffer. It’s a heck of a gambit with the winds of change for lower bond yields, Fed accommodation, and a desire among investors for fresh opportunities.

This could be a heck of a short squeeze.

Too Calm

The Volatility Index (VIX), aka the Fear Index, finished at the low point of the year…

…and institutions are buying big time.

Recap

Money is starting to leak out of Artificial Intelligence (AI)-centered trades, mostly by retail investors, into the bottom of the chart.

This market is a locomotive with a small engine and a huge caboose.

Today’s Session

Futures have been in the red all morning and remain so after the Producer Price Index (PPI) release.

• Headline +0.9%
• Consensus +0.2%

While the media may take this and run with the tariff narrative, like the CPI, my initial glance sees this as more of service issue, not goods. Be that as it may, the number, historically, is not a major market mover.  I suspect the market is looking to stall for consolidation.

Moreover, I continue to marvel at the drubbing on earnings misses, they are sparking. My goodness.

Comments

I thought we may be seeing a true, lasting rotation yesterday but one day does not make a trend. Regardless, the market has a lot going for it - lots of money on the sideline, favorable tax environment and deregulation. A few speed bumps too - today's PPI report and the main street media. Nevertheless, we're still in a long-term bull market - hang on! Mike Mayone on 8/14/2025 10:16:14 AM

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