00:00 Speaker A
I want to dig into what we've been seeing in those large cap tech stocks because, you know, it has been interesting to see this pullback from some of those best performers of the year.
00:15 Speaker B
Yeah, and this has been largely described as a rotation. It's something we've been talking about over the past week as investors move money from some of those momentum names to maybe some underappreciated areas of the market. And Wall Street analysts have told us that this is a sign of a healthy bull market. You want to see this rotation in order to keep seeing those record highs. And if you take a look at some of the sector action, you're going to see that rotation story play out. So look at healthcare, real estate, consumer staples. Those are the top three performers over the past five days, so really more defensive plays. And then look all the way at the bottom there, you have tech, the biggest laggard by far, down over 3%. And within tech, you'll see individual names like Palantir, for example, really underperforming amid these rotational moves. Shares are down more than 15% from the all-time high that it set last week. And remember that Palantir was the top performing stock in the first half of the year. So just really being hit hard. On Tuesday, we saw shares fall 9%. Yesterday shares were down 1%. Earlier today in pre-market trading, we are down marginally again. So, what's interesting though, is that retail traders are aggressively buying the dips here. So I reached out to Vanda track research to glean what consumers are doing when they look at the retail trading across the board here. And Vanda tells us that small retail investors poured more than $59 million into Palantir during Tuesday's sell-off. Now this was the biggest single day retail inflow in a week. But even with retail piling in, we're still seeing some of those losses. And that just underscores that familiar reality that even though retail can push back a bit, institutional trades, those institutional flows, they often determine the price level of a stock. And this is something we actually spoke about with Interactive Brokers' Steve Sosnick on Stocks and Translation. That episode available on our website and he told us that if big funds are reallocating away from a name, small traders are essentially standing in front of a much larger wave here. So just something to keep in mind as we continue to see these shifts in leadership and as retail traders really try and rush into some of these momentum plays that are currently quote-unquote on sale.
03:41 Speaker A
Some people are buying that sale, Josh, right? Or they're preparing to buy that sale.
03:47 Josh
Yeah, Julie. I mean, I think the question is right now, if you look at a one-year chart of Palantir, right? This isn't the first time the stock has fallen this much in a five-day period or in a 10-day period. This has been the story of this bull market really for a lot of these AI stocks, right? Look at February. Remember February? These stocks rallied into the end of February, that's when the Nasdaq topped. It didn't bottom until that April bottom, but that was a buyable dip, right? So is this a buyable dip right now is kind of a key pressing question for investors. So team at Jefferies tried to answer that for their clients. They took a look at the last 10 instances of a over 10% drawdown in a momentum tech stock basket. So that would include stocks like Palantir. That would include stocks like Oracle recently, core weave. And what they found is on a five-day period after that drawdown, that basket actually usually rallies by about 4% in the last 10 instances. Over a 60-day period, it rallies by a nine and a half percent gain. So what they've found is at this point, you usually start to find a little bit of a bottom. Now what Jefferies and other Wall Street strategists are pointing out right now, what wasn't maybe happening in those last 10 instances, a big Nvidia earnings report coming next week, right? Of course, that is key to this AI story. So strategists a little bit more hesitant to just say, history says buy the dip here. History didn't necessarily include the biggest stock in the market that has led this AI rally coming out and giving you guidance next week. It seems like it might hinge a little bit more on what Nvidia says as to whether or not this dip is really buyable right now.
