📈 Market Rotation
But not into the defensive names you're thinking...
Investors Go Defensive
Over the last few weeks we have seen a clear trend - investors are rotating into defensive names.
That is manifesting itself in a couple different ways.
Bond yields are rising: Take a look at TNX (10-year treasury). This is happening because there is an expectation that inflation is coming back.
Commodities are rising: Gold and silver are reaching all-time highs. Bitcoin (which I would consider a commodity) is being bought as an inflation hedge.
Mega cap tech is rising: investors are turning to mega cap tech because they have reliably massive cash flows and strong margins. See below FNGU which is the 3X bull ETF of FAANG stocks.
Make sure you keep this in mind as you trade going forward. And remember “defensive” isn’t necessarily just XLP names.
Investors think about defensive stocks in different ways depending on the environment that they are trading in.
For more information on how I am trading the market right now, watch this video: