Rotation Is What's Coming Next (It already started!)

We are entering a new cycle in the stock market and it's called ROTATION.

We've seen the Mag 7 and the DOW bounce back and many stocks reach all-time highs in 2023. After a bear cycle, the institutions test the waters by pumping up the tried and true stocks first. This is why we trade their favorite stocks. We want them to pump the stock prices for us.

The pump worked out well, consumer spending is holding steady even with pesky inflation, and the recession so many were calling for is nowhere in sight. On top of these factors is the well-known rumor that the FED will cut interest rates soon. Maybe by Jan, maybe Feb, but most agree they will do it by March.

Lower interest rates mean that medium-sized corporations can borrow money at lower rates to grow. Institutions know this, so they now feel confident in their next move: ROTATION.

The institutions rotate their buying into the medium-sized names in the Russell 2000. Check out the $IWM ticker. It is the $SPY of the Russell 2000. 

I'm not saying- go out and buy shares of $IWM now. I am saying that everything is looking peachy right now in the market and institutions are willing to put more cash that was on the sidelines into the market. Our favorite stocks will continue to benefit, but you'll also see those smaller companies start to get a bump in early 2024.

You may see stocks like PYPL, CHWY, PINS, SQ, and similar newer companies that took a battering in 2022 get a boost and start retracing more seriously as well.

This is GREAT news for our stock picks. I'm not changing any of my holdings. Any rise in the markets will fuel rises in the best stocks in the market. I may throw smaller amounts of cash in Q2 at some of these names if it looks like the first quarter is showing strong ROTATION.

Happy Trading!