Mega-Cap Shakeout:
The most liquid and overcrowded mega-cap tech names are getting taken to the woodshed this earnings season. Tuesday after the CLOSE both MSFT and GOOGL reported disappointments with each falling 8 and 9% respectively Wednesday (MSFT snapped a string of FOUR straight positive earnings reactions and GOOGL rose 8 of the prior 9). Mister Softee attempted an intraday rebound rising 8 handles from the open only to finish right back where its started. Google did much of the same. After the CLOSE Wednesday META keeping the theme true to form dropped 19% as it inches toward the very round par number. At the CLOSE Wednesday it ws 63% off most recent 52 week highs and has been in a freefall since the week ending 2/4 cratered 21.4% in the largest WEEKLY volume since the week ending 3/23/18 that traded almost half a billion shares. This blunder is nothing new for Facebook as it is likely to be down the 7th time in the last 9 after REPORTING earnings. These names are still the top holdings for many mutual funds and they will probably be under pressure as the positions need to be unwound. Question is is where does the capital rotate too? Banks, energy, materials and biotech? Or maybe an IBM or ORCL that have been enjoying strong Octobers. We will know soon enough.