Market Overview & Potential Risks - Market is experiencing rotation from leading stocks to lagging stocks, leading to pullbacks in large-cap indices [1][2] - Bottom-up analysis reveals intermediate-term overbought downturns, indicating underlying deterioration [2][3] - Loss of support from mega-caps and leaders like Palantir could trigger a market correction, typical for this time of year [3] - Short-term sector rotation shows technology underperforming, benefiting oversold sectors like cyclicals [5] - Measured move objectives from previous breakouts suggest the risk-reward isn't favorable for new long positions [9] Key Levels & Technical Analysis - Initial support for NASDAQ 100 (NDX) is around 22,300, representing a breakout point [7] - If overbought downturns become widespread, the 200-day moving average and cloud model support are near 21,300 [8] - A 4-5% retreat to initial support is anticipated [9] Sector Analysis & Opportunities - Utilities sector is currently overweight, showing positive technical catalysts and intriguing relative performance [10] - Short-term rotations are positive for utilities versus the S&P 500, with oversold conditions suggesting stabilization [10] - Energy sector may perform better due to a bounce in crude oil prices [6] Interest Rate & Yield Impact - Market anticipates a rate cut in September, but the certainty is questionable [11] - If rate cuts occur, expect 10-year yields to decline, potentially breaking support around 42% (0.042) [12] - Historically, the start of Fed rate cut cycles tends to be more negative than positive for the equity market [13] - 10-year yield is in a tight range of 42% (0.042) to 44% (0.044) [13]
Market's rotating from leaders to laggards, says Fairlead Strategies' Katie Stockton
CNBC Televisionยท2025-08-20 20:10