I was looking for some fairly quiet action today, before Friday's morning jobs news, and although the indices didn't do very much, there were some very surprising moves below the surface.
The strength in financials and homebuilders stunned many market players, especially since it occurred as last year's leaders, mostly big-cap technology names, saw pressure for the second day in a row.
Retailers also performed well overall, but we had some real extremes with big moves in both directions. There were losers, such as GPS and ANF, but some big winners, such as BBBY, SHLD and ROST, as well.
Profit-taking hit some of the small caps that have been hot in the first few days of the new year, along with big-cap technology names, but obviously what happened today was a sudden rotation into some new sectors. It was very abrupt, and there weren't any obvious catalyst, so many market players were caught flat-footed.
The question now is whether this rotation is a theme that continues, or just an aberration that is going to catch folks by surprise when it fizzles. If there was some obvious reason for the shift, I'd be more inclined to think it has legs, but I'm going to be a bit skeptical for now.
To complicate things a bit more, we have the jobs report in the morning. Expectations appear to be quite high, and with the market fairly strong in front of the report, there is increased danger of a "sell the news" reaction.
My game plan is to make another short-term bet on GOOG, which I believe is hideously cheap right here....
long GOOG
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