September 2, 2020, 11:36 am EDT
Overheated Rotation
Rotation took place today from overheated stocks to other areas. TSLA -10%, ZM -7%, AAPL -3% retreated quickly from the amazing rally. Beaten down industries like restaurants are coming strong as we mentioned. For example, Dave & Buster’s (PLAY) is up +4% due to potential re-opening its business.
Defensive stocks like utilities and consumer staples are up to absorb overflow from profit-taking and preparation for the coming pullback.
All indexes are up more than 50-60% in the past 5+ months without any pull back or rest. Thus, when pull back begins, it could be sharp and fast to the downside.
It would be reasonable to have a mixed component in portfolio consisting of offensive (technology, semiconductor, software, retailer), emerging industries (restaurants, hotels, material), and defensive ones (food, discount retailer).
