Investors looking for returns in lower-quality stocks on July 12 are once again fascinated by MEME. Still, that could signal a red flag for the S&P 500 .
Jonathan Krinsky, an analyst at Hongqiao Trust and Investment Group (BTIG), said that when some of the most shorted stocks in the market rebound, such as the current group of retail investors and the decline in safe-haven stocks such as consumer staples, investors should wait for the market for a few days. Be prepared for weakness.
A retail group of stocks that includes companies including Rivian and Riot Platforms has risen more than 10% over the past three sessions, while the Select Consumer Staples SPDR Fund has lost 1.3%.
In the past 18 months, the gap between the two has been 10 percentage points or more 17 times, and 12 of those times the S&P 500 fell three or five days later, Krinsky wrote.