Is the Tech Rotation Finished? (No)

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Our View

It's time to focus on earnings and the Fed now. Four of the Magnificent Seven stocks — Amazon, Apple, Meta, and Microsoft — are set to report earnings in the next few days. I don't know what will happen to the ES and NQ after Powell speaks, but what I can tell you is that the rotation out of Nasdaq/tech stocks is ongoing. This was extremely evident in yesterday's NQ price action, which was a straightforward selloff.

The 'great rotation' began on July 9th, but I noticed a change in price action at the end of June and early July when I started observing that the NQ was declining while the ES was rising. 

Despite the recent rally, the rotation has not eased, and we are now entering the busy part of earnings season. Powell will be discussing how soon rate cuts should begin, and Friday's jobs report is crucial for the Fed. A softening job market will be vital for initiating rate cuts in September, with total rate cuts in 2024 projected to be between 2 and 3. We shall see about that!