Martin Barraud/OJO Images via Getty Images
Investors should be hedging momentum as the rotation in equities gains traction, according to the Goldman Sachs trading desk.
The global chip selloff Wednesday led to the Nasdaq's (COMP:IND) worst session since 2022, but the more-AI-insulated Dow (DJI) topped 41,000.
"Is what has worked the last 6 months still going to work when rate cuts are repriced, political regime change probabilities are increasing, and AI has re-rated?" Goldman's FICC & Equities desk asked. "We think it could make sense to take profit on momentum gains given the change in the market dynamics as the rotation we pointed out last week continues, illustrated by the worst 5 day streak of Large Caps (NYSEARCA:SPY) (IVV) (VOO) over Small Caps (NYSEARCA:IWM) since 2020."
The desk provided this chart of rotation in the last five days compared to where the money had gone through July 9.
