On Friday, 10 stocks accounted for 63% of the S&P 500's (SPX) overall decline. Some of these names have four-digit gains over the past year, so the blowoff, while scary, wasn’t an indictment per se, just a realization that it's been a heck of a party.

Momentum and Growth took it on the chin, and the only place to hide was low volatility – heretofore, a tremendous under performer.

Technical View

The dilemma now is whether individual stocks will pull back, testing the NASDAQ-100 (NDX), S&P 500 Technology Sector (XLK), and Momentum (SPMO) at their respective 50-day moving averages. It could happen quickly, and they would have to hold. But the Relative Strength Index (RSI) readings are back to comfortable “buy” levels, and money flows remain strong.

Bottom Fishing

Some stocks that have enjoyed bursts of momentum and outsized valuations in the past fetched bids, including Netflix (NFLX) and Walmart (WMT). But the rally has reverted to thinning out.

Laying It On Thick

The financial media spent all weekend laying it on thick. This is the latest artificial intelligence (AI) rally killer. The fact is, these were always going to cost a lot of money and take a long period of time to truly integrate into society. Be that as it may, media-induced selloffs have been ambrosia for those who bought the dips.

P.S.

While considering rotating for rotation's sake, just know the folks at S&P just took out Pool Corp (POOL) and Campbell's (CPB) from the S&P 500 Index and replaced them with Marvell Technology (MRVL) and Flex Ltd. (FLEX).

Go Knicks!

Today’s Session

Looks like a nice bounce session this morning - the key will be how much the initial move can seduce cash off the sidelines.

The fundamental underpinnings of the AI story have only gotten better.  So while there is no doubt some stocks got over their skis or made even bulls uncomfortable, the value proposition keeps improving.

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.