Analysts at BTIG observed a shift in the stock market on Tuesday, with investors taking profits from previous high-flyers. This led to uneven performance across different sectors.
High-growth stocks, previously leading the market charge, experienced a significant drop on Tuesday. This marked their worst day since November 2022, though analysts downplay it as a typical market correction.
Despite remaining up 23% year-to-date, the GS High Beta Momentum Long index trades roughly 12% below its 50-day moving average, indicating potential for further decline.
The analysts note that while most momentum stocks are underperforming, Nvidia (NVDA) has remained relatively stable. However, they believe a broader correction might not be complete until Nvidia experiences a significant price drop.
Among individual stocks, Apple (AAPL) stands out. Its daily Relative Strength Index (RSI) has dipped to 23, signifying oversold territory and the lowest level since December 2018.
While oversold, Apple’s price recently broke below a key support level at $173. If it fails to recover above this point, the analysts predict a potential drop towards the October 2023 lows around $165.
On the flip side, energy companies and regional banks are performing well. Additionally, small-cap value stocks are showing signs of a potential breakout.
