Bigly rotation out of tech but will it last?

BY ANDREW GIOVINAZZI

January 03, 2024

Yo Pit Crazies,

0DTE trading class kicks off today and I hope everyone who was interested was able to join.

This was a crazy one day candle for -1 Short VIX futures ETF (Ticker: SVIX). As much as the market looked ugly Tuesday morning, it did not stay that way. VIX futures opened at highs and spent the rest of the day giving up the move. SVIX is an inverse product so if VIX futures rise, SVIX drops. SVIX opened low and rallied all day to close at the high.

SVIX 6 month chart

Why do I bring this up? SVIX was up over 50% in Nov. That is a move to garner attention.

If the rotation out of Big Tech continues, does SVIX have room to make new highs?

Inquiring minds want to know.

Names outside of Big Tech making power moves

Merck and Co. (Ticker: MRK) ran the biggest candle in 6 months today. 6 months! On a red market day to boot so any trader can see if the Mag 7 sneezes the market has the flu. However money can go into other stocks that have had decent earnings the last 6 months. Or had 0 performance in 2023. The market never buys 1 thing forever. I added MRK to the Easy Trade Button.

This is how I define sector rotation:

Net money is staying in the market and volatility is not increasing.

VIX rallying on a Tuesday after a 3 day weekend should be over 1 point. VIX closed .10 off of the lows of the day or up .75. One day does not make a year but I need to see higher VIX sustained to believe it is over for the Mag 7.

Meanwhile, healthcare, oil and biotech are still at very low levels with great earnings. SVIX trading at an alltime high, 38.14 or higher, means traders are comfortable with some rotation out of tech.

To Your Trading Success,