In a Tuesday note, BTIG analysts noted a rotational trend in the equity market, where investors are taking profits from the best-performing stocks, leading to a mixed performance across different sectors.
Analysts said high momentum stocks experienced a significant drop on Tuesday, marking their worst day since November 2022, though this is viewed as part of a normal market fluctuation.
The GS High Beta Momentum Long index is still up 23% year-to-date, while its 50-day moving average (DMA) is roughly 12% below current levels, marking “a decent downside target,” analysts said.
“While long-momentum broadly is underperforming today, perhaps the biggest molong Nvidia (NVDA, Not Rated) is barely down. If this is the start of a bigger correction broadly, it likely won't be complete until NVDA sees some sort of shakeout,” they wrote.
Analysts also highlighted Apple’s (AAPL) performance, which is currently in an oversold condition with its daily Relative Strength Index (RSI) at 23, the lowest since December 2018.
Despite being oversold, the stock has broken through a volume shelf around $173, and if it cannot reclaim this level, the lows of October 2023 around $165 could become a target, they noted.
Sector-wise, energy and regional banks are performing well, and small-cap value stocks are showing signs of breaking out.