A Rush for the Exits

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A colossal sector rotation stole the headlines today, a sell-off in Big Tech shares ruined the wild party mood for stocks.

Since May 19, the Rotation

US Steel $X +18.5%
Banks $KRE +8.3%
Steel $SLX +7.4%
Russell 2000 $IWM +5.5%
S&P 500 $SPY +3.4%
Nasdaq 100 $QQQ +0.2%

Bloomberg data

Nasdaq, Worst Week of 2017

Apple (AAPL), Alphabet (GOOGL) Class A shares, Microsoft (MSFT), Facebook (FB) and Amazon (AMZN) — lost more than $100B in market value between the close on Thursday and the close on Friday.

For most of the day, only 3 stocks in the S&P 500 tech sector were in the green: IBM (IBM), Teradata (TDC) and Western Union (WU). Apple, Facebook, Amazon, Netflix, and Alphabet all traded more than 2 times their 30-day average volume.

Largest 5 Nasdaq Stocks


Today: $2.9T
Before Election: $1.8T


Big tech has led the equity market higher in 2017.  The S&P 600 is up 2% on the year (1.4% today) while Big Tech was 20% higher.

PowerShares QQQ Trust Series 1

Today, we witnessed the second highest notional trading volume since 2009, at nearly $14B.

FANG Rollover

Shares of Apple fell nearly 4%, while the other four companies fell more than 3%.

Stealing the show was a colossal macro centered rotation out of crowded Big Tech (FANG off 4%) into under-owned value (Steel and Energy names).  At one point today, U.S. Steel X was up 22% from last month’s lows.

Winners in Financials

Financials were also a rotation winner with names like Goldman Sachs GS breaking a four month down trend.

GS reverse

At one point last week, Goldman was 18% off this year’s high – big reversal this week.

Where Did the Money Flow?

Emerging debt ETFs saw the largest weekly inflows in more than four years of available data, adding $1.4 billion for the week ended June 7, equivalent to 3% of assets under management. This marks a 23rd straight week of inflows since Dec. 28 totaling to $12.3 billion, 28% as a share of assets.  – Bloomberg

Big Tech Rollover in the QQQs

QQQ volToday will mark a key sector rotation inflection point.  Market leadership is shifting from the loved to the un-loved.

Amazon Flash Crash

AMZN FlashQuants and algorithmic trading now make up over 30% of the volume across several of the major exchanges.  That’s up from less than seven percent five years ago.  What’s the only problem with a quant driven market?  At the first sign of trouble, the machines simply back away – air pockets are far more common today. 

Powerful Inter-Day Reversal


We witnessed classic blow off top signals in multiple names today – always watch for the new high with a close below the previous day’s low on volume.  A beautiful NVIDIA candle blew out today – years from now this one will be remembered.