Yesterday wasn’t a fun day if you owned stock market “hares” like Broadcom Inc. (AVGO). But if you invest in “tortoises?” You were sitting pretty!
Take a look at the MoneyShow Chart of the Day. It shows the action in the chip sector standout AVGO yesterday, down 12.6% after it released earnings – plus the performance of the Dow Jones Industrial Average, the iShares Russell 2000 ETF (IWM), the State Street Health Care Select Sector SPDR ETF (XLV) and the State Street Financial Select Sector SPDR ETF (XLF). They were up anywhere from around 1.7% to 3%.
AVGO, INDU, IWM, XLV, XLF (1-Day % Change)
Source: TradingView
Zoom out to a year-to-date timeframe and frankly, it’s no contest. Broadcom was up 38.7% through Wednesday’s close.
The IWM was no slouch at 17%. But the Dow was up only 6.2%, while the XLV was down 4.2% and the XLF was off 6.6%. Those are tortoise-like performances by comparison, especially with the S&P 500 Index (^SPX) in the midst of its longest weekly win streak in 41 years!
So, what does yesterday’s action “mean” for traders? Is it just a one-day rotation? Or something more?
Put me in the camp of nothing much…YET. But with investors all-in on technology stocks in general and AI/chip names in particular, Broadcom’s action is telling.
The company’s fiscal second quarter sales surged 48%. Its earnings per share beat estimates. Yet AVGO still tanked the most in 16 months.
When expectations are sky high, you have to keep raising the bar. Broadcom didn’t – and it paid the price. IF we get one or two more high-profile disappointments, more investors and traders will start thinking “You know what? Tortoises aren’t the ugliest portfolio pets after all!”
