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It appears the GIANT sector rotation we have been talking about for weeks might finally be upon us.
Recall that most of Wednesday the NASDAQ-100 was down.
It took a NASTY end of day rally led by the Industrials to finally get the NDX up on the day.
The DJIA was up 2.2%, the RUT up 3%, the XLI (the Main Street Index) was actually up 3.35% on the day.
The NDX, led by the ‘Fab 5’ of MSFT, AAPL, GOOG, AMZN, and FB was barely up on the day.
Facebook in particular was done, some of this antitrust/China unrest stuff could be an equalizer on these names.
I continue to believe that we are going to see domestic industrial outperform ‘new economy’ for the next week or so.
Again, with market breadth positive, we could see days where at a minimum the NDX is down on the day.
So when will the VIX die? With the DJIA up over 2% and XLI up over 3%, it is going to be really hard for the VIX to drop.
Even if the SPX only moves 1-1.5% a day if the other indexes are flying around VIX is going to be bid.
In addition, if the ‘Fab 5’ are going to drop like a stone, VIX is going to be bid.
Those stocks do have the ability to flush the whole market down the toilet if they drop on the open and then get a head of steam.
This could be why, right now the VIX curve is saying all is good for now, but not so good after July.
The VIX Light is Red.
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