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This is a pattern that I’m looking for in the U.S. stock market right now. (Notice, please the “a.” It’s not the only pattern worth watching at the moment.)

The next stage in this upward trending market may not be a reversal of the general market or a further soaring by the technology winners of the past few weeks.

Instead we could see a rotation from those technology stocks, which everyone agrees are looking mighty extended now, to consumer stocks and cyclicals and that group that I’m calling “reopening dependent stocks.

The reasons for this rotation?

What I’m dubbing the “vaccine put” (more about this later today). Investors are very willing to look past current bad news for consumer/cylical/reopening stocks because a coronavirus vaccine is just around the corner. Either before the election or in the early part of 2021, depending on who you want to believe. (Voices that warn that we may not see a vaccine on that schedule, or that we might not be able to deploy it quickly, or that it might not be as effective as hoped are in a definite minority, these days.) If we get an effective vaccine on schedule, flagging revenue at theme parks and at restaurants and on airlines will be a thing of the past and the current tough quarters are irrelevant.
The continued hope/expectation that Congress will pass a big coronavirus rescue/stimulus package that will put dollars in the hands of consumers to spend on the things produced by consumer/cyclical/reopening companies.
That the seeming current moderation of increases in new coronavirus cases after just modest rollbacks of state-level reopening means that we won’t need restrictions that will send the economy back into free-fall. (Again more on this later today.)
The rotation was still a gleam in traders eyes with gains in consumer/cyclical/reopening stocks in the morning fading, for the most part, in the afternoon, and the biggest technology giants tacking on more gains.

But, I wouldn’t ignore the signs that this might be where the market is moving, especially if tomorrow’s July jobs numbers are stronger than expected. (Especially if, like me, your portfolios are relatively light on consumer/cyclical/reopening stocks.)

To give you an idea of the action in some stocks that points, again, toward rotation:

Theme park operator Six Flags (SIX) was up 3.20% at the close. Quick service burger and chicken chain Shake Shack closed up 2.68%. Casino operator MGM Resorts International (MGM) finished ahead 10.41%. American Airlines (AL) ended ahead 3.82%  There were “extraneous” reasons for some of these moves–hopes that airlines would get another bailout from the government when the current “job preservation” funding expires on October 1, for example.

Not all tech stocks were down–in fact that NASDAQ Composite with its 1.00% gain on the day outperform the Standard & Poor’s 500 (up 0.64%) sand there Dow Jones Industrial Average (up 0.68%.)

Apple (AAPL) closed with a gain of 3.49% and Facebook (FB) added 6.49%. But some less headline-isa tech stocks showed much more modest performance with Palo Alto Networks (PANW), for example up 0.67% at the end of the session and Twilio (TWLO) continued its downward move with a drop of 6.34% on the day. SolarEdge Technologies (SEDG), a very hot stock after a solid earnings beat, closed down 4.51%. Taiwan Semiconductor Manufacturing (TSM), equally hot after Intel (INTC) announced a delay in its next generation manufacturing process, ended trading off 1.36%.