Hey, Ross here:
Welcome back.
It’s the last week of what has been a very choppy, sideways February for the broader markets.
I don’t expect that to change this week.
But when we “slice” the market a bit more, a different picture emerges.
Chart of the Day
This chart shows the performance of the S&P 493 (the S&P 500 minus the Magnificent 7) – versus the performance of each individual Mag 7 company this year.
As you can see, the S&P 493 is handily beating every single Mag 7 component…
And has delivered a 2.7% return year-to-date till the middle of February.
To put that into perspective, if we annualized that 2.7% return, that would be over 20% – a very impressive number for such a large basket of stocks.
It also speaks to just how strong breadth is under the surface – even if we’re not seeing it in the cap-weighted indexes.
For another example, take a look at the chart for the NYSE Composite Index (which is far more comprehensive than just the S&P 500 or the Nasdaq).
Since the November lows, it’s only been steadily climbing higher.
The truth is, right now, the “AI Trade” has been put on ice.
The smart money has been scaling back their exposure, something we can guess based on their heavy net selling this month.
Now, keep in mind that this is talking about net selling – which just means they’re selling more than they’re buying.
It does not mean they’ve stopped buying.
The question is – what are they buying?
The chart below gives us a critical clue.
Just look at those numbers – solid double-digit returns across the board…
And these aren’t even individual stocks – they’re ETFs.
This leads us to an important insight about the market, which I explain below.
Insight of the Day
You can beat the market without picking stocks – but simply by picking the right sectors/industries.
The previous chart proves it.
You have indexes like small-cap energy stocks (PSCE) surging nearly 30% in 1.5 months – 10X the performance of the S&P 493.
Each of these indexes and ETFs comprise dozens if not hundreds of stocks.
You don’t need to pick stocks to beat the market, you just need to pick the right sectors/industries…
The ones the smart money is rotating into.
So yeah, don’t let yourself get swayed by all the bearish narratives.
In fact, I think now is one of the best times to buy.
I explain why in this blog post here.
Customer Story of the Day
“By FAR !! the best way to understand the workings in the stock market. Ross and the team are the real deal, no BS.
I’m a lifetime full subscription member and couldn’t be more satisfied.”
Ross Givens
Editor, Stock Surge Daily
