Josh Brown: Home Depot and Lowe's look terrific right now

and any weakness of late in any of the

marquee names

has been bought and we're going to see

this time if that holds true once again

well we'll see look tech is so

incredibly crowded even still it's 26

of the s p 500 and we all know that

they've had huge

outperformance so the expectations are

so

incredibly high even into this pullback

and i just think it's a very bad setup

into the print fang i just i calculated

right before the show fang plus

microsoft

up 60 on average from the march lows

nvidia paypal and zoom are up 86

from the march lows so even into this

pullback

it's not really that compelling at least

to me and you know i've been a net

seller selling a facebook and trimming

of amazon

i'd be happy to buy them back but

they're not down

enough and they still are very very

crowded i think also what's important

and what's exacerbating the rotation

pete alluded to it is this rotation that

we're seeing

on the macro see inflation expectations

are starting to inch up a little bit the

dollar

is weakening and that usually is good

for cyclicals and value

and risk on assets i mean in the in the

thick of everything yesterday

i thought it was interesting that the

iwm was green it was green for most of

the day and it outperformed relative to

any other benchmark so

i actually think that we could struggle

here a little bit let's get through

earnings

sometimes you get chances and i think

that's what we're going to get but i

think we want to wait until after

earnings okay josh

steph just alluded to it right the

pressure going into the print

and you have a lot of these companies

reporting their earnings next week

wednesday begins facebook and then

thursday alphabet amazon

and apple how much is now riding on

those reports

given the moves up in those stocks and

now a seemingly

a struggle in some of those names

yeah the queues at 255 are still like 35

points

above the the rising 200 day so we could

still

remain in an uptrend and have a much

more substantial correction in these

names

uh than we've seen so far and by the way

this has happened recently

we saw this happen in the second week of

may and we saw it happen in the first

week of june and the big tech stocks

took a huge hit

but while that was happening other areas

of the market picked up the slack and i

think

there's some element of that happening

now and it's perfectly normal

it happens all the time it just when it

happens in the biggest

most liquid most widely followed and

most talked about stocks

it's it's pronounced right we all set up

and pay attention wait a minute how much

is amazon down this week

so i think it's it's something that we

should pay attention to

i don't think it's a reason to

completely change our our our mindset

about what's working and what isn't and

again as i alluded to

take a look at home builders they look

outstanding while tech was getting hit

yesterday

both the xhb and the itb the two most

widely followed etfs that

track the the home building market uh

both made new

new highs and they continue to break out

and i could find a lot of names

individually in there

from the companies that actually build

houses and even home depot and lowe's

look terrific so

i do think that you have opportunities

in places

outside of tech and that's positive

another thing that i think is

uh bears paying attention to is the

continued breakdown of the dollar

i noted last night on my blog the euro

usd pair

just snapped a 10 year 10

year downtrend in in that pair

so um that's something that's caught a

lot of people's attention and then you

go ahead and you look at

at the the metals complex you see gold

you see silver you see the miners doing

really well

um i would point out very quietly the

material sector

xlb it's a small part of the market we

don't really talk about those names much

on the show

but very quietly new record high but so

there are other places people are making

money well they are away from apple and

microsoft they are look value's going

for its

fourth straight positive week so your

points well taken steph mentioned the

dollar

as well uh i get it but but josh are you

suggesting that you you could have a

more substantial correction coming

once again in in mega cap tech

oh josh's shot is frozen shannon is that

what you think

could be in the cards

i don't i don't disagree with josh's

points but i also want to

go back to something that pete pointed

out the fundamentals for these companies

despite the fact that we're seeing these

loftier valuations for them and that

they're really pulling the entire index

up

are still very uh very attractive longer

term

so you know do you get a rotation where

you can get another

five seven ten percent um off the top

and that certainly would be concerning i

think for the average s p

500 investor given the concentration

that stephanie talked about

however you know if you're looking at

this from a long-term perspective

you know i'm not sure that you know

anything has changed in the narrative

particularly for a name like microsoft

after their report yesterday

so you know could this be a buying

opportunity absolutely i think that the

it would be positive actually if we can

continue to see some of this breath

increase

and that some of these more cyclical

sectors start to pick up the slack

this is absolutely what the market needs

to continue to to

gain over the back half of the year into

2021 we cannot ride high on a defensive

trade and technology

and expect us to get enthusiastic about

the market in 2021

so i'd like to see a little bit more of

this rotation it offers the opportunity

for people to maybe add to some of these

more quality quality positions in

technology

and in communication services and so i

think it's a welcome opportunity

although you're right it will create

some panic for those that have a lot of

s p 500 exposure given the concentration