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Sector Rotation or Distribution?

|Includes:Apple Inc. (AAPL), BIDU, CLF, LFL, NFLX

Leadership stocks, like AAPL, BIDU, and NFLX took a hit last week and it appears we may be in the midst of sector rotation.  The big question is, where is the money that is rotating out of the big name stocks rotating into?  New leadership needs to emerge, and emerge quickly or we may see recent consolidation in the indexes break lower instead of higher.

More and more institutional investors, such as mutual fund and pension fund managers, aren’t bothering to sift through earnings reports and income statements weeding out winners from losers, and are instead trading large blocks of stock and other financial securities based mainly on macro concerns.  The result, all variety of companies and commodities, the good, the bad, and the ugly, are trading in virtual lock step. 

Bottom line, if new leadership doesn't emerge as a driving force for the major indexes, then stocks like CLF and LFL, which have been performing well, are very likely going to get hit in the next wave of sell pressure regardless of the fact that they have sound fundamentals driving them. 

Disclosure: Short AAPL, Long CLF and LFL