U.S. stocks have come roaring back from April’s selloff, and momentum names have led the charge. – Getty Images/iStock
After helping to power the U.S. stock market’s historic recovery from April’s tariff-induced selloff, many of the momentum names popular with individual investors are showing signs of exhaustion.
That means investors should approach with caution over the coming weeks. Because another opportunity to buy the dip might lie ahead, according to Jonathan Krinsky, a technical analyst at BTIG.
“While it’s still too early to say we are getting a more widespread pullback, we are starting to see some early cracks in certain high-beta momentum names today, with many leadership stocks working on potential downside reversals,” Krinsky said in commentary shared with MarketWatch on Thursday.
As Krinsky pointed out, Goldman Sachs Group’s long-only basket of high-beta momentum stocks appears to have stalled out just shy of its year-to-date peak from February.
– BTIG
He identified seven momentum stocks that look particularly vulnerable: GE Aerospace GE, Robinhood Markets Inc., HOOD Lemonade Inc. LMND, Netflix Inc. NFLX, Tesla Inc. TSLA, Twilio Inc. TWLO and Upstart Holdings Inc. UPST. To be sure, only three of these stocks — GE, Tesla and Netflix — are components of the S&P 500.
Even if they encounter some near-term turbulence, all of those stocks remain in strong uptrends, Krinsky said. That means any pullbacks would likely prove to be another “buyable” opportunity.
“To be clear, most of these are in strong primary uptrends, so pullbacks are ultimately buyable,” Krinsky said.
“Tactically, however, we would be cautious of many of these names over the next couple of weeks, especially heading into quarter-end, when big rebalances often take place.”
Since skittering to the brink of bear-market territory in early April after President Donald Trump unveiled his “liberation day” tariff plans, the S&P 500 SPX has staged what could ultimately prove to be its fastest-ever recovery back toward…
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