10 Stocks to Watch as the Rotation Builds

The bad news is that the Roundhill Magnificent Seven ETF ($MAGS) is down 2%, with Alphabet ($GOOGL) dropping 12% and Microsoft ($MSFT) turning red after gapping higher at the open. The good news is that the money coming out of the mega-caps and some of tech is rotating into the broader market.

Breadth is 63% positive, new 12-month lows have contracted to around 100 so far, the iShares Russell 2000 ETF ($IWM) is up 1% and the SPDR S&P Biotech ETF ($XBI) is up 0.9%. The VanEck Semiconductor ETF ($SMH) is off its lows but still in the red.

Amazon ($AMZN), which reports Thursday night, is being sold in sympathy and is down about 3.6%. That takes some of the risk out of the report, and I’ll hold the position I have rather than reduce it at this point.

I used the morning weakness in SpaceX ($SPCX) to add to my position. Nothing in the Microsoft or Alphabet reports is negative for SpaceX. It was sold because it sits near those names, not because of anything in its own business.

More Bullish on the Rotation

This kind of rotation makes me more bullish. When money comes out of the Magnificent Seven, it needs a place to go, and there are plenty of lagging stocks that will benefit.

I have plenty of capital to work with, and small-cap earnings season gets going next week after Apple ($AAPL) reports on Monday. There should be plenty of opportunity.

Position Updates

Here’s where things stand with some of the stocks I’ve been writing about:

1. Absci ($ABSI). This small biotech dropped sharply right after I wrote it up. It is back at its highs and breaking out Thursday morning, and the chart looks good.
2. BridgeBio Pharma ($BBIO). It has turned up nicely from the lows and is now trading above its 50-day moving average after earnings. I’ll look to add once it digests the report.
3. NeurAxis ($NRXS). It is thinly traded, but it is developing well, and I’m looking to add.
4. Xeris Biopharma ($XERS). It bounced back from a dip and continues to show good relative strength ahead of its report Nov. 5.
5. Precigen ($PGEN). It is waiting for news on a competing treatment from Inovio Pharmaceuticals ($INO). It should see a big move when that news hits.
6. Starling Oncology ($STLN). It is consolidating near its highs as it waits for earnings.
7. TG Therapeutics ($TGTX). It is testing breakout levels.
8. Vir Biotechnology ($VIR). It is also testing breakout levels.
9. TeraWulf ($WULF). It bounced but is struggling to gain momentum. I’ve reduced it to a small position while I wait for the chart to develop.
10. Ondas Inc. ($ONDS). The company makes autonomous drone systems used for security and defense. The stock has finally turned up off support and is testing its 50-day moving average.

Game Plan

The mega-caps are under pressure, but the rest of the market is acting better than it has in a while.

I’ll be holding Amazon into its report Thursday night and looking to add to the names that are setting up as the rotation builds.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider several of the names mentioned to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Rev Shark was long AMZN, SPCX, ABSI, BBIO, NRXS, XERS, PGEN, STLN, TGTX, VIR, WULF and ONDS.

• Category: Market Commentary
• Tag: AAPL, ABSI, AMZN, BBIO, Earnings, Features and Commentary, GOOGL, Indexes, INO, IWM, Magnificent Seven, MAGS, MSFT, Newsletter Midday, NRXS, ONDS, PGEN, Rotation, Small Caps, SMH, SPCX, STLN, TGTX, Trading Strategies, VIR, WULF, XBI, XERS