Momentum Monday – More Rotations

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The momentum from the previous week fizzled a bit with the start of the earnings season. It is still very early to judge, but so far we can say that bank earnings have been accepted very favorably and some of the tech earnings not so much. Look at the fade in NFLX and the breakdown in TEAM, for example. 

The same two major themes continue to persist in the market:

  1. Homebuilders and building material stocks are shining and are basically the new momentum stocks. Many of them are already up 10-20% for the past couple of months. 
  2. Many enterprise software stocks continue to decline due to fear of rich valuation. The Wework debacle really scared many investors and it has reset the valuations not only in the private but also in the public world.

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