A Tale of Two Rockets
Last week's hot stocks seem to be giving way to ones that were unloved until this week.
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The group rotation continues. Or shall we just say this market is a tale of two rockets.
For the past few weeks, Rocket Lab RKLB has been heading up, but last week it began to look parabolic, rising thirty percent. It’s not like it died this week, but it has given up eight percent.
It’s almost as if the Rocket Traders just moved over to Rocket Companies RKT to rally that stock fifteen percent so far this week.
Hey, at least they have moved on from Opendoor and are branching out to other meme stocks.
On a more serious note, we have seen constant group rotation. The stocks that were hot last week have been droopy this week, and the stocks that have been in the doldrums got a boost this week. The drugs and staples have rallied along with the homies and retail. That means the equal-weight S&P (RSP) had a heckuva day relative to the S&P.
Is it the start of something, or just more of the same thing we have seen before, where the equal weight has a terrific day and then just tails off once again? I’ve gotten my hopes up way too often. I would note that the ratio has yet to make a higher high.
Speaking of ratios, we looked at the SOX relative to the Nasdaq on Monday, and I noted that it had not even gotten up to last year’s highs and had stalled out for a few weeks now. On Tuesday, it rolled over. Let’s see how the market handles itself should the semis be laggards.
We’ve now seen ASML roll over, we’ve seen Micron roll over, and it appears Texas Instruments will join that club now, too. As I noted two days ago, I think the semis are an important group, and when they are doing well, the market gets the benefit of the doubt. When semis roll over, we need to pay attention (same with banks).
If the black line breaks (5600), then the next support is back at the blue line (5400).
In the meantime, the better breadth did not change any of the indicators. That would require good breadth for another day, which would mean the RSP must have some follow-through.
On a positive note, the Utes made a higher high and I did not see one person fuss over it. In fact, I’m not sure it even got a mention. Sure, you have to squint to see it, but it happened. Interest rates continue to stay in that range. They threatened to break last week but managed to come back down.
