2024's most popular trades are losing steam: Why it matters

Some of the top trades from the first half of 2024 are not looking so hot at the moment. Investors are swapping Big Tech stocks for small caps, which they think will get a boost from a Federal Reserve rate cut. The yen (JPY=X) and copper (HG=F) are also well off their highs.

Catalysts anchors Brian Sozzi and Madison Mills explain why it should serve as a reminder to investors: things don't go up in a straight line.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Stephanie Mikulich.

Video Transcript

All right, let's turn to stocks because the market has undergone massive changes in recent weeks.

Trades that were hot at the start of the year are beginning to lose steam tech stocks, the Yen the Hang Seng Index and Copper futures all falling in the last month.

And Matty, I think this is a really good reminder to investors.

Nothing goes up in a straight line.

And I think if you want to find good long term investments, you have to look beyond seven stocks in the S and P 500 there's 493 other out there that are worth your time.

Go read a 10-K, go read your finance stat tables on these companies, go find them and you may find a good stock to own.

I love that you pulled this chart up for us to include today.

Well, it's really important because we do talk about those tech stocks losing steam, but we often lose sight of some of these other popular trades that were a little bit more frankly interesting, right?

You look at something like copper that had a huge run up this year.

Now, moving to the downside the dollar yen.

Obviously to watch as we head into that Bank of Japan decision this week from their central bank having said that I want to look at the Russell versus the NASDAQ.

The Russell is going to be that small cap trade that we've been talking about.

Investors rotating into last week, the Russell was up 3.5% of the end of the week, the NASDAQ closed down 2.5%.

And we've been seeing this play out over the past three weeks here, this rotation trade.

So one big question I have for folks that were speaking with, is it, is it already too late?

You have gotten in on the small cap trade or is there still room to you like to nerd out on markets, Mattie?

I'm still trying to figure out this move into small caps because growth is slowing down rates haven't been cut yet.

So to me, this doesn't feel like a fertile backdrop to small caps.

What the hell do I know?

I mean, these stocks have been on fire the past few weeks.

I think it is very company specific and we've heard that from a lot of guests too, don't necessarily own the ETF the basket, own individual stocks, but it takes a lot more time and a lot more effort.

So true.