In the 1980s, Pantene ran a series of television commercials with Hollywood stars imploring their audiences with “Don’t Hate Me Because I’m Beautiful.” Today, Technology (XLK) could borrow that same line from the mavens of Wall Street who constantly call for their demise (while imploring folks to get into emerging markets or something else that hasn't worked in a decade).

Yesterday, once again, Technology was smart and beautiful.

Large Cap Growth

Large-cap stocks excelled while everything else ran in place or struggled. 

Small-Caps Struggle

After a couple of good sessions, there isn’t any follow-through for small-caps. It’s the old one step forward and two steps back.

Even the S&P 600 Small Cap Index (SML), with higher quality names than the iShares Russell 2000 ETF (IWM), can’t gain any traction.

There is economic data out today, but everyone is waiting for the Consumer Price Index (CPI) report tomorrow morning.

Today’s Session

It's odd, but Wall Street continues to ignore the strongest market area, Technology. They urge investors to buy stuff like emerging markets, mostly on a hunch that after 12 years of underperformance they are due to rally.  It's not technical or fundamental research – just a hunch!

The fearmongering over Technology has gotten so bad that investors have been dumping.

Yet, over the past five days, you wanted to be in Technology, not out.

Meanwhile, overall risk appetite is edging higher, but still negative. Investors still expect greater losses in the next 30 days.

This is supposed to be some kind of contrarian indicator (which means go the opposite because the masses are dumb money). It's understandable why people are anxious.

However, the real problem is the chance of missing opportunities out of fears that, while rational, deflects from why you are in the market in the first place.

To make money.

You can make money with the herd as long as you get out of the pack before they stampede off a cliff, this means you will always be chasing. 

Comments

"after 12 years of underperformance they are due to rally" - regression to the mean. But how long do you have to wait? Charles Lucente on 10/9/2024 10:23:47 AM

Tech will remain high until it ain't. Larry Minter on 10/9/2024 11:50:54 AM

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