Chart of the Week – Real Rotation
The rotation out of Tech and into everything else was widely discussed on Thursday: 80% of the SPX advanced as XLK fell 1.6%.
Indeed, one day doesn’t make a trend. But it’s been this way since the April lows. In fact, the S&P 500 now has had positive breadth for eight straight sessions on days in which Technology was the worst-performing sector.
Of course, mega cap growth has bounced back each time since then. It will be a different story if the latest downturn gives traders pause this time. And then we’ll see just how keen they are to rotate to other areas for a longer period.
The last time that Tech underperformed the SPX for an extended span was from late-January though early May.
That lasted 14 weeks (believe it or not), but the SPX declined in just three of them – during the spring 6% sell-off. In other words, the market has proven that it can rally without Tech before in 2024. It may have to prove itself all over again soon.
![](https://cappthesis.com/wp-content/uploads/2024/07/2024-07-12_07-26-14-xlk-spx.jpg)
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