Hey, Ross here:
Tech just got hit with a massive wave of selling.
And the timing is terrible – for the sellers.
Take a look.
Chart of the Day
Last week, BofA’s non-corporate clients – aka retail investors – sold roughly $11 billion of individual stocks.
That was one of the fastest weekly selling sprees since 2008.
And Tech took the biggest hit by far.
Roughly $4.3 billion flowed out of Technology stocks alone.
That’s one of the largest weekly Tech outflows BofA has recorded since the financial crisis.
So, retail investors are bailing out.
Now look at what’s happening to the businesses underneath those stocks.
Technology currently has some of the strongest positive earnings revisions in the entire S&P 500.
Analysts are raising estimates far more aggressively in Tech than in most other sectors.
So we have:
Retail investors dumping Tech stocks…
While the earnings outlook for Tech keeps getting better.
That doesn’t seem to make sense…
Until you consider the below.
Insight of the Day
The crowd acts predominantly on feelings.
Observing retail investor behavior is better than any college psychology course.
Why would retail investors sell a leading sector of the market…
At the same time the tech sector was breaking out to new highs?
It’s because a lot of the crowd “feel” that the tech rally has gotten too far…
Despite all evidence to the contrary.
So they sell prematurely…
And, as the rally continues, will probably buy back in at the highs again.
That’s just how it goes…
And why retail traders so often lose money in the markets.
They act based on feelings – not evidence.
How many of these retail traders are even aware of the underlying earnings picture of the Tech sector?
I’d bet very few.
The good news is that, as a reader of this newsletter, you’re constantly being exposed to data the average retail trader does not see…
And that gives you a powerful edge in the markets.
But if you want to take that edge to the next level…
Then keep an eye out in your inbox tomorrow morning – because I’m announcing something special.
In the meantime…
Here are the breakout stocks I’m looking at right now.
Customer Story of the Day
"I started a few months ago and started implementing the simple strategy with $1000 and have seen a return of over $300.
Ross makes trading very understandable and if you follow along you will make money even with the losers.
Probably the best thing you learn is risk management!"
Embrace the surge,
Ross Givens
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