Since Pfizer’s vaccine news on November 9, markets have been on fire.
The world is going to reopen, folks! And some stocks will benefit a lot more than others…
Back in late October, I told you about two sectors primed to soar based on outsized buying activity: financial and discretionary stocks.
The 10-year Treasury yield was at its highest levels since early June, making financial companies more attractive. And discretionary names were benefiting from a better earnings season than expected.
Since that October call, both sectors are up double digits.
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But where has the Big Money been going lately?
Into five “reopen” sectors—those that were hit hard by COVID, and have since gotten their groove back.
And they have more room to run…
Stock buying was off the chart in November
Before we look at the recent rotation, let’s recall how volatile 2020 has been. Markets went to highs, then to lows, and back to highs. It’s been a year like no other.
Below, you can see all of the monthly buy and sell signals. Notice how November crushed June’s level of buying. Also, you can see in the lower chart how incredible the selling was in March.
Another interesting datapoint for November was exchange-traded fund (ETF) inflows. Some reports have suggested it was the largest equity ETF inflow for a month on record. MAPsignals confirms it.
Below are the monthly ETF buy signals in November.
Needless to say, last month set records. And so far, December has been a big month of buys, too.
There are big rotations… and then there are mega rotations. I wrote about this a few weeks ago. And now I want to back it up with pure data.
Breakdown of reopen sectors
Since the rotation started on November 9, here is the sector breakdown seeing Big Money buying:
The top five sectors seeing the most buy signals were financials, discretionary, technology, industrials, and real estate. Those stand to benefit the most in a reopening economy.
As markets march to all-time highs, the reopen sectors are poised to vault higher than other groups. That means there’s upside opportunity in the coming year for high-quality stocks in those sectors.
The bottom line is this: Markets have the rocket fuel to head even higher in the coming weeks. I’ve been openly bullish on the market for some time now. But as we lift into overbought territory, it pays to be selective with where you put your money. I’m looking for value in these sectors.
Wall Street is prepping for the reopen. Are you?
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