Bezos Goes the Way of Pesos

The theme of this week across many markets has been rotation. And while the temptation may be to assign a political reason for all of the moves, in reality the price action in the bond market (which was already on this trajectory long before Trump's victory) may carry more significance than politics.

In other words, the true battle going forward may not be Democrats versus Republicans or even Trump versus other Republicans like Paul Ryan, but rather the bond market versus The Fed. 

A spike in rates often seen a major rotation within equities, where growth stocks start to show their age and make room in the spotlight for rate-sensitive sectors like brokers and financials to thrive. 

Against that backdrop, we should not be surprised to the see the "FANG" names and their ilk cool off here. However, a more troubling sign would be "distribution," or heavy selling my large funds. Note the difference between a mere pause or mild pullback versus heavy duty selling. And we are seeing the latter on the Amazon daily chart, below, with sell volume surging to accompany the price drops.

Granted, AMZN may be unique given the Trump/Bezos rivalry during the election process. But either way the selling is a bit more than bulls want to see here.

At a minimum, we should let the FANGs and QQQ stalwarts set back up. The key is going to be whether they take down the rest of the market, rate-sensitive sectors be damned.