After a summer of choppy trading, rotation continues to be the lifeblood of this bull market. We can see an example of this with one of the biggest stocks in the world. After NVDA reported its earnings last week, it did something it doesn’t normally do. It rallied. It was up nearly 10% despite typically being sold off regardless of how strong of a quarter it had. A week later, it has given back most of the rally and the semiconductor sub-sector has fallen further than where it started. In the meantime, less flashy sectors such as Healthcare, Financials, and Energy have been steadily climbing, with their top holdings breaking out to new highs rather than being stuck below them.
We’re approaching a seasonally weak part of the year for equities. Focusing on the areas of the market that have the strongest momentum and continue to outperform will be key if those trends begin to play out. As long as there is rotation, there is still opportunity for nimble investors.
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