Could This Tech Selloff Spread to the Rest of the Market?

Hey, Ross here:

The tech selloff continues.

Is this a normal healthy rotation – or a sign of deeper trouble?

Let’s take a look.

Chart of the Day

This chart shows the Momentum Crowding Score – a gauge of how much traders have been chasing momentum stocks.

For the past couple months, these have been the hot tech and semiconductor stocks.

Almost everyone has been crowding into the trade – sending the stocks even higher.

Momentum begets more momentum.

But – the second momentum stalls, the reversals can be just as dramatic…

Especially when a lot of that momentum is being fueled by margin debt.

That’s likely what we’re seeing right now in tech.

But it doesn’t mean deeper trouble for the entire market.

Credit spreads are still looking healthy….

Source: @Duality Research via X

And broader positioning in stocks is far from being overly crowded…

Meaning there’s still plenty of money that could flow into stocks and keep sending the market higher.

In short, while those who were “all in” on tech and semiconductors are likely feeling the pain…

I don’t think there’s a major justification to extrapolate this to the broader bull market just yet.

Insight of the Day

Your portfolio is not the market – don’t get tunnel vision.

Like I just said, those who were “all in” on tech and semiconductors are likely feeling the pain…

And many of them are probably posting about it all over the socials…

Which makes it seem like this tech selloff should be more concerning than it actually is.

And look – I get it.

It hurts to see your portfolio bleed.

But your portfolio is not the market.

And other people’s portfolios are not the market either.

For instance, did you know that 9 out 11 S&P sectors closed higher yesterday?

That 368 out of 500 S&P 500 stocks closed higher?

Trading tunnel vision will cause you to miss the forest for the trees.

Of course, there are no guarantees…

And it is entirely possible that this pullback could spread beyond tech.

But that’s why later this afternoon at 3 p.m. Eastern…

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I’ll explain everything when I see you later this afternoon.

So click here now to guarantee your free spot if you haven’t yet…

And I’ll see you at 3 p.m. ET.

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