Fresh Prints: The Morning After

Election Day is over. Whoever you voted for, the institutions woke up today, looked at the tape and did what I do the day after Thanksgiving: they went back for seconds of everything.

On Monday the big money was sitting in T-bills and ordering plain toast. Today it walked up to the buffet with a plate in each hand: SPYM 0.59%↑ for $482M, QQQ 0.03%↑ for $482M (strangely similar in notional to the SPYM), SPY 0.44%↑ for $460M, META -1.64%↓ for $451M, VUG 0.75%↑ at 35.5σ ($230M) and VTV 0.35%↑ for $239M. That’s growth and value in the same order. “He’s going to say something about the buffet again.” I’m going to keep saying it until they put a sneeze guard on the S&P.

The arc: the cash came off the sidelines and into the middle

The part of today’s tape I’d actually pay attention to is the middle of the cap range. IWR 0.22%↑ (Russell Midcap) printed twice, for $288M and $243M, with ranks of #12 and #17. That’s two of the biggest IWR trades in its own history on the same day. SCHM -0.11%↓ (another mid-cap fund) added a 24σ print.

Mid-caps are the middle child of the market. Nobody ever buys them a birthday cake. Today someone bought them two. Like my grand-pappy was fond of saying: “That ain’t normal.” When institutions want broad exposure after an event, they usually just buy SPY. Making a specific bet on mid-caps is a statement that they want the economically sensitive part of the market, not just the seven companies everyone already owns.

Risk on, but keep getting paid

Even the risk-on money wanted a little paycheck on the side:

• USHY 0.51%↑ (high-yield bonds): $154M
• JEPQ 0.00%↑ and JEPI 0.52%↑ (covered-call income funds): two prints each
• XLU 0.65%↑ (utilities): $146M
• NOBL 1.71%↑ (dividend aristocrats), plus BND 0.18%↑ , BNDX 0.23%↑ and USIG 0.31%↑ on the core-bond side

The hedges were tiny this time. SH -0.55%↓ and SQQQ -0.14%↓ together came to about $14M. Monday’s fire extinguisher got downsized to a smoke detector.

The ones you probably missed

WCN 1.46%↑ (Waste Connections) printed $146.6M, ranked #8 against its own history, in a garbage company. It showed up on the board three times. That’s either a duplicate in the data or the most enthusiastic trash pickup in history. Either way, someone wrote a nine-figure check for the least glamorous business on earth, and I respect it. Garbage doesn’t care who won the election. It just keeps showing up on Tuesday.

GNR -1.04%↓ (global natural resources and miners) came in at 29.75σ, the second-highest sigma on the board. Pair that with the silver interest from Monday and someone keeps quietly sniffing around hard assets.

IGV 1.44%↑ (software) printed $173M at 25σ. SPCX 0.56%↑ printed $212M. Someone put writing a big bet on rockets again.

The TL;DR

Monday was sweatpants and T-bills. Wednesday was the buffet. The headline index trades are big, but the tell is the size of the mid-cap prints in IWR. Out on the edges: a nine-figure garbage trade and a miners fund showing up for the second time this week.

If you missed the whole day, that’s the day. If you’re hunting for ideas, start with IWR, WCN and GNR.

See you soon. Stay fresh.

— VolumeLeaders

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This is not investment advice. I’m a guy reading a spreadsheet who thinks about buffets too much. This newsletter is for informational purposes only and is not investment advice. Nothing here is a recommendation to buy or sell any security. Past patterns in this data are not a guarantee of future results, a point this piece has hopefully made concrete rather than just disclaimed.