Monday was one of the crazier days in recent memory. At first glance it’s hard to see it with the S&P nearly breakeven on the day. Yet it becomes more apparent when you note the extreme difference between the Dow’s gain of +0.56% versus the Nasdaq’s hefty decline of -0.76%.
How the heck did this happen?
It’s called a rotation day. Some groups were in favor (retail and banks). And other groups (like tech) got slaughtered.
What should you do about it?
Nothing. You can’t chase a rotating market because you will never catch it. Kind of like a dog chasing its tail.
Instead you just stay put with your fundamentally sound stocks (strong estimate revisions and attractive valuations). This way when the rotation ends, and sanity is restored to the market, then these kinds of stocks will outperform.
Best,
Steve Reitmeister (aka Reity… pronounced “Righty”)
Executive VP, Zacks Investment Research
Pelias' views 