šSell Tech, Buy Rotation (+3 Stock Picks)
Stocks are breaking down. Here's what to do next...
Welcome back to MktContext where we study the US economy and time the stock market.
Current market timer: HOLD
We called the dead-cat bounce last week. So far, weāve been right to be bearish chip stocks. The rotation out of chip stocks (SOXX) accelerated to the downside, violently breaking below the 50-day average on its way to the 100-day.
The AI trade is imploding. Hope is not a good investment strategy. To be a good investor, one must understand the market context and decipher price action. If youāre still holding Nasdaq (QQQ) or semiconductors/AI stocks, you need to revisit your portfolio!
Non-tech stocks working
While the tech complex implodes, consumer and finance stocks have been rebounding sharply. Here are some of the picks we recommended over the last few weeks:
DAVE, a tiny digital banking company, continues to rally past our $400 target. This stock is up 50% since we recommended it, and a whopping 967% over the past two years. We still have ārunnersā left in the trade.
Travelers (TRV) and Chubb (CB) insurance companies were given as breakout ideas in our Jun 28 post. Financial stocks have been doing excellently lately and are a destination for capital fleeing the semiconductor trade.
Bloomin (BLMN) and Toast (TOST), two restaurant related ideas, not only withstood the tech selloff of the past few weeks. They are actually pressing up against the highs and poised to break out. Consumers remain resilient and spending is about to recover strongly:
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What fueled the tech selloff?
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Company specific news fueling the selloff
Technical analysis
Stock picks and our portfolio
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