It’s Rotation Nation Mag 7 Fade, Other Stocks, Bitcoin, And Gold Rise

Not every investor is buying a ticket to “Rotation Nation.” But some certainly are, given how a couple of the “Magnificent Seven” stocks are starting to fade, while other stocks and sectors are playing “catch up.” How can you profit from this sectoral shift? What about the shift into entirely different alternative classes, like BitcoinBTC and gold? Find out from top MoneyShow expert contributors.

Ivan Martchev Navellier & Associates

We have gone back into the pattern of seeing corrections last only one or two days, as sharp as they may be, with investors rotating into the broad market as the tech sector gets extended, despite remaining very strong, with no sign of abating.

Notice the top line (below), representing the S&P 500 (SPX) Index, atop the line beneath it – the S&P 500 Equal Weight Index (SPXEW), representing the same components of the S&P 500 Index but not weighted by market cap (size). Two stocks make up about 14% of the market cap of the S&P 500 but only 0.4% of the SPXEW, as they are equal to all the other stocks in that index. The large performance differential you see below is basically due to the tech sector.

There was a big rotation into the broad market recently, with the Nasdaq 100 registering a fresh all-time high in the first 30 minutes of trading one day and basically going downhill for the rest of it. Before you begin to extrapolate this for the foreseeable future, the pattern has been that the tech sector gets overheated, it rotates for a day or two, and then starts chopping higher again.

There is no telling when we will get an intermediate-term correction. It is certainly due, but it can come from higher levels.

Meanwhile, I have heard the suggestion that tech is as extended as it was in early 2000. That is not the case. We have surging sales and earnings at the moment, and much lower valuations than we had in 2000, when we had only surging share prices. Nasdaq needs to more than double and possibly triple from here to get as frothy as 2000, which so far has not happened. We hope that won’t be the case, if we want this rally to continue.

The broadening of the market that we witnessed in November and December disappeared in January, but it began to come back at the end of February. So far, I view the glass as half full and I expect further gain for stocks, particularly if we see falling inflation data and Treasury yields that are behaved.

Bryan Perry Cash Machine

Investors are closely monitoring Federal Reserve Chair Jay Powell’s updates on the Fed’s monetary policy approach AND preparing for the February employment data that will be released on Friday. In the meantime, I like SLR Investment Corp. (SLRC) as a buy.

Both events and some negative news surrounding three of the not-so-Magnificent Seven – AppleAAPL (AAPL), Alphabet (GOOGL), and TeslaTSLA (TSLA) – are giving investors a reason to lighten up on some big-cap tech exposure. But there is strong rotation in other market sectors, namely industrials, materials, and non-bank financials.

This is a very healthy development for the bull market to extend higher while providing confirmation that the economy is on better footing than most market strategists were forecasting. The current estimate of the economy growing at around 3% for the first quarter supports the base case, a market that can rally by another 8%-10% by year’s end.

But not without days like Tuesday, when some air came out of the Artificial Intelligence (AI) balloon, and deservedly so. The great majority of the Cash Machine model portfolio is trading very well against a market landscape that has seen bond yields back up.

The blended portfolio is more geared toward an economy that will continue to expand at a slow pace, with interest rates staying higher for longer. I just don’t see the Fed being in any kind of rush to cut rates, but we’ll all get more color on this soon.

As for SLRC, it just posted Net Investment Income (NII) of $0.44 per share, beating estimates by $0.01. Revenue of $59.59 million beat by $0.12 million as 2023 loan originations reached a record high. It was the fourth straight quarter of NII growth with the Net Asset Value (NAV) climbing to $18.09 per share.

SLRC made $449.8 million in investments during the quarter versus $346.3 million in Q3. Investments prepaid and sold during the quarter amounted to $462.1 million versus $306.8 million in the prior quarter. The company declared a $0.41-per-share quarterly dividend.

Recommended Action: Buy SLRC.

Mary Anne & Pamela Aden The Aden Forecast

It’s being called a “perfect storm” for commodities overall. Last year a total of 27 commodities ranging from metals to agriculture outperformed most other asset classes..

This…