Stocks are booming higher, but traders are having a harder time making money

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It sounds like an odd problem to have: we're running out of places to rotate into. But for active traders, it's a serious issue.

Value is at a new high. Growth is at a new high. Big caps are at new highs, midcaps are at new highs. The small-cap Russell 2000 is lagging slightly, 4% off its high, but no one seems to be complaining too much.The bad news is — well, traders aren't sure what the bad news is, or whether the old rules even apply.One feature of the market this year is that if one sector lags other sectors come along that continue the rally, so the S&P stays on mostly an upward trajectory.

That sounds like an odd problem to have: we're running out of places to rotate into. But for active traders, it's a serious issue. "There's no Covid discount anymore," Peter Tchir, head of macro strategy at Academy Securities, told me. "There's no obvious sector where it looks like the rest of the market has ignored the space. I'm not sure if we should just be 50% in cash and just figure out what gets mispriced in the next week or two.

"Investors want it both ways — they want strong growth but they don't want the Fed to taper [buying bonds]," Young said. "The Fed is not going to sit on their hands with this kind of growth, they're going to have to at least taper" sometime later this year, Young said."We have priced in great economic growth, moderate inflation, and a belief that yields are under control," Peter Tchir said, noting that recent reports that the Japanese have been buying U.S.

 

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