Sector Rotation?

I'm not sure I would have expected to see any sector rotation and I suspect it has more to do with a NASDAQ 100 level or AAPL than rotation, but there's some evidence that Tech will perform better (on a relative basis) than financials.

The S&P-500 closed at -0.32, the index is more closely associated with Financials than any other because it has more Financial weighting than any other. The NASDAQ 100 closed at -0.28, not a big difference, but as you know the NASDAQ 100 is the most closely associated with Tech and specifically AAPL which at last check carried nearly 20% of the entire NASDAQ 100's proprietary weighting, yes it's a trade secret that you can own with a subscription to NASDAQ for  a mere $10,000 a year. In any case it always seems to come out sooner or later.

To give you some idea of how much weight AAPL wields over the NDX, if you took the bottom 50 NASDAQ 100 stocks according to their weighting and combined all of them, they'd have roughly the same wight a AAPL (at least at last check). It's the same with all of the averages so if the Plunge Protection Team wants to hold the market up they don't have to buy thousands of stocks, just s few carefully selected stocks among the major averages that have the most weight (influence over the daily percentage move).

We use to see this a lot with AAPL until everyone in the Hedge Fund community saw that Dan Loeb no longer held AAPL among his top 5 holdings and every other hedge fund raced for the same small door all at once. You may not believe it, but the reason 88% of hedge funds underperformed the S&P during 2012 is because of this very lemming-like response. Hedge Fund managers make a lot of money, you'd think they'd try to earn it, but what they really do is try to keep it. If you follow the crowd, then you don't stick out of the crowd, but if you strike out on your own and happen to strike out, you do stick out and risk losing your high paying job. Think about how many times we saw an accumulation period today running in to December 28th from several days/week before, it actually makes our job easier in some sense.

We get a pretty clear and very strong signal on a 4 hour chart (this is a super strong timeframe and represents heavy institutional activity) that tells us a lot of someones are selling in to AAPL's higher prices/top and then they keep selling as 3C follows price down. So all these funds doing the same thing actually created that signal.

In any case, the point is Financials vs. Technology in the very short term. It looks to me, even before I glanced at the two sectors that AAPL was hinting at some Tech rotation.

Here's both Tech and Financials...

Financials

 The very short term chart (1 min) shows a pretty ugly picture in Financials over the last 2 days, it looks like there's a fair bit of distribution and not much support under Financials.

 On a 5 min chart that afternoon move up went negative pretty quick also suggesting there was selling in to any strength and not by retail.

Technology

 The 1 min chart is Tech looks a lot different doesn't it? The recent trade today looks more like there's been accumulation there.

Ultimately though the 10 min and longer charts are the highest probability, they show the heavier action and this leading negative divergence in Tech suggests that any short term strength as seen on the 1 min chart above is likely very short lived a it will likely be sold in to as well.

This is why when looking at AAPL I prefer an options position over a straight equity buy, I feel the probabilities are decent for AAPL to make a move higher, but I also feel the probabilities are decent that it is short lived so the extra leverage of options can make the trade's profit potential worthwhile.