Each time the market goes through a material selloff, I always like to bring out charts of “the generals” i.e. the leaders of the recent move. These are usually names I try to focus on, in the long side of the portfolio as their relative strength is among the best. Most are either the last vestiges of secular growth (either domestic, international or some combination) in America in a very stagnant era – hence get sometimes spectacular valuations, or are special situations. Until recently, Apple (AAPL) was the most prominent general but has fallen by the wayside already.
With the serial bottom callers out in force as of late last week, I remain unconvinced until I see real pain in the new generals. Does it *have* to happen? No. But when people truly give up the ghost and we have a washout selloff, babies get thrown out with the bathwater and it’s a great contrary sign. These are some of the names we should be looking to if/when that moment comes. (in order of market cap)
Citrix Systems (CTXS)
F5 Networks (FFIV)
Riverbed Technology (RVBD)
Acme Packet (APKT)
Aside from this group the only sectors really working at this time are utilities, precious metal miners, any bond ETFs of every shape, flavor, and smell.
Disclosure: Long all names mentioned excluding Apple, Citrix Systems, Netsuite in fund; no personal position