The Market's Been Saving Sectors. Will It Save the Mag 7?
On Tuesday the 493 were bright on the screens. The megacaps stayed dim.
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I get the sense that folks who own the megacap growth stocks haven’t been loving the market of late.
As I have noted, of the 10 largest-capitalized stocks in the S&P, not one has made a new high in the past week. And now we have the Beloved Semis down 3% in a matter of days.
Then on Tuesday these megacap stocks didn’t exactly light up the market once again.
Instead the 493 got their day in the sun. Banks got saved. The restaurants have been saved, either by their charts coming to support or private-equity firms offering buyouts. The Homies got saved. A few weeks ago the drugs got saved. Will anyone save the Mag 7?
It strikes me that the same professional money manager who owns Alphabet or Apple probably does not own Rigetti Computing. But perhaps they own Western Digital (WDC) .
I have become fascinated by Western Digital, which I highlighted (was it right at the top?!) a few weeks ago as a stock that had gone parabolic. It has since fallen 15% and it has done so with very little fanfare. Notice it is the first such correction since the April low.
The stock has some support close by when it fills that gap just under 110, but that support is rather flimsy. When stocks don’t correct along the way, there is very little support to rest upon.
Does that money manager own gold, or any of the precious metals? In its October Fund Manager survey Bank of America shows 43% of investors say long gold is the most crowded trade. But get this: It surpasses the 39% that see being long the Mag 7 as the most crowded trade! Gold competing with the Mag 7!
I have said that I am not sure what to do with a bull market that is led by the metals and mining group. I should note that the Daily Sentiment Index for gold and silver did not change on Tuesday; they remain at 87. That in my view is high enough to get a correction, but I have been wrong in calling for one. If this gets over 90, I would consider it extreme.
Away from that, none of the indicators change. I would note, however, that both the Nasdaq and the S&P came down to the area of Friday’s low and we did not see an increase in stocks making new lows. That is the first time in weeks that we have not seen an increase.
Yes, I know it’s because the 493 got their day in the sun, but that would be rationalizing an indicator. Seems to me the group rotation trade is still with us.
