00:00 Josh
The Stacks Index, which tracks the sentiment of retail investors, jumped into an eight-month high in November. For more we’re bringing in now Joe Mazola, head trading and derivative strategist at Charles Schwab.
00:10 Josh
Joe, great to see you. So, let’s start right there, Joe. So the stacks hitting an eight month high here. What does that suggest to you, Joe, about risk appetite as we’re heading into year end?
00:24 Joe
So let me put it in context, Josh because it an eighth at an eighth month high, it’s still about the 65th, 66th percentile. So we’re not in that nose bleed FOMO territory that you might have seen back in uh 2021.
00:39 Joe
Um so it it’s it’s bullish. Um but one thing interesting about this uh this past month, Josh is that only two of the 11 sectors uh actually had uh net buying, which is which is which is odd because you you saw IT, you saw consumer discretionary and basically everything else on that cell. So people were were rotating out of some of these cyclical names
01:05 Joe
into more of these uh the the narrow leadership. It was the Mag 7, which which which like I said, I find interesting because it kind of flies in the face of what you saw with the overall market where you had health care leadership, you had financials, you had utilities, materials that were kind of moving the market, but uh for
01:21 Joe
you know, what we notice is that um, you know, the the five main stocks or, you know, even just the top three, whether it was Nvidia, Palantier, Meta, they all shared something in common. They all had a 20% pullback during the month and our clients jumped in and and use that as an opportunity to buy.
01:38 Josh
In terms of what they were buying, Joe, you’re kind of going where where I leading me where I was going there because I saw here it did look Joe like a lot of sort of AI heavy tech names. So I see uh Nvidia, meta, uh I think Tesla, Amazon, Palantier. I mean, when when you see that Joe, is that sort of, is that just kind of tactical trading or no, that’s, you know, more firm, sort of renewed belief in the AI theme and trend.
02:00 Joe
I’m going to lean towards tactical a little bit. I’m going to I’m going to lean towards using opportunities, you know, pullbacks to 50 200 day moving averages, you know, pullbacks like I said of 20% uh from all-time highs as clients saying, look, you know, we’ve been waiting for opportunities to get into these names. They they’re getting relatively cheaper. And remember, even with all of these names, they all had good earnings. It wasn’t it wasn’t like um, you know, they they they missed on on certain targets. It was for the most part,
02:29 Joe
when you dug through uh when you when you dug through the financial statements or you you you had the, you know, the post post earnings call, it was, hey, we’re spending a little bit more than maybe we were expected on AI and so some of the companies that had those type of uh announcements were were punished, you know, Meta being one. And so when clients got an opportunity to kind of scoop those up, they did and and what I the reason I say tactical as well too is because
02:51 Joe
uh a perfect example would be um would be would be Tesla. So Tesla, you know, pulled back just shy 20% of the month, clients bought it, but then that was actually one of the top two stocks that they sold at the end of the month when they got that nice little rally back. So it was interesting there and then the flip side is if you look at the stocks that were sold, Apple, Broadcom, Eli Lily, Rivian, Intel,
03:13 Joe
these were all stocks that actually had really good months. Uh clients use those as opportunities to trim. I mean, perfect example would be something like Eli Lily, rallied from 850 to, you know, 1110 or something like that but put it, if you’re looking from a technical standpoint, Josh, it’s like a 86 RSI.
03:28 Joe
It’s not not something you see very often. and and as opposed to kind of piling on and and and chasing the winners, they, you know, they they trimmed in a strikes. I think that was prudent.