Chart of the Day - Monday, August 7, 2023

Today's Chart of the Day was shared by Christian Fromhertz (@cfromhertz). Many have been calling for a rotation out of Mega-Caps in the second half. However, we're seeing a rotation among Mega-Caps instead. The Communications sector ($XLC) is the new year-to-date leader after recently pulling ahead of Tech ($XLK). The ratio between the two sectors ($XLC/$XLK) is trying to reverse higher in favor of $XLC, and it's above the 50, 100, and 200-day moving averages. The two largest Tech stocks ($AAPL & $MSFT) have come under pressure recently, while the two largest Communications stocks ($META & $GOOGL) have picked up the slack. The Mega Caps are passing the baton between one another to prevent exhaustion, allowing the whole team (the S&P 500) to run further.