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Stock Market Choppiness is Persistent – Distribution?
Rotation Out of Large-Cap Tech Stocks Continues
BraVoCycles Newsletter
February 04, 2026
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A few weeks ago, we identified a potential topping pattern in Nvidia (NVDA), a chip leader in AI, as a part of a series of Magnificent 7 posts.
Today, we will discuss the Philadelphia Semiconductor Index (SOX), one of the leaders of the great bull market move since 2009.
Rotation Out of Techs Continues
Rotation out of tech/AI stocks — Investors shifted from high-valuation tech names (e.g., Nvidia -3%, Microsoft -2%, software/cloud firms down 3–7% in sectors) into more economically sensitive or value-oriented areas. This followed a strong January rally in AI/tech, with profit-taking and reassessment of long-term growth amid stretched valuations.
Software and cloud sector selloff — Broad weakness in software/services (e.g., ServiceNow -7%, Salesforce -5%, PayPal -17% on weak guidance) blunted positive earnings from Palantir and Teradyne. Pundits see this as a "reassessment" of AI infrastructure spending vs. returns.
Despite generally upbeat earnings from large-cap tech stocks, investors were taking profits after earnings releases. Will this trend continue with Alphabet and Amazon earnings reports this week?
SOX Cycles
The daily chart cycle composite suggests that $SOX ( 0.0% ) is due for a correction toward April.
Notice the negative divergence in c-RSI at the most recent high.
We will take a deeper dive in the Pro newsletter.
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What’s Next for the Stock Market?
The positive seasonality worked on Monday, but indices gave up most gains on Tuesday.
We warned about the choppiness a few weeks ago, primarily due to the potential ending diagonal pattern.
It is amplified due to the rotation out of large-cap tech stocks; we warned about the relative weakness of the Magnificent 7 stocks in our series of Mag 7 posts.
Indices made little progress, since the November high; The SPX and NDX are below that high, while the DJI is slightly above.
There were plenty of short-term buy-the-dip opportunities, but traders must feel exhausted. . .
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