📈 Spot the Rotation

This is what you need to know.

Buyback Blackout

We talked yesterday about how we are in a blackout period for a growing number of corporations. This means that they are not allowed to buy back their stock.

This is going to continue (and grow) for the next month or so.

During this period, we will get a really good sense of what institutions are doing and where they are putting their money. It removes some of the murkiness from the market.

Sector Relative Strength

So what I have been doing is overlaying the indexes and sectors to see what is being bought during the blackout period.

What I found was very telling.

Look at the SOXX. Semiconductors are being dumped. And no this isn’t just a result of MU earnings - all semiconductors are being sold off and it began before MU released earnings.

What is leading? Cloud software. We saw names like GOOG AMZN and CRM make big moves over the past few days. It is clear that this is what institutions are looking at as market leaders for now. It could also be that they are buying stable, high cash flow companies as well.

But I recommend that you use the beginning of the blackout period as an inflection point and use that as a “starting point” for analyzing the market because it is definitely causing a shift in investor behavior.