CNBC Television
Johnson: This market is rotating but resilient
11/5/2025, 12:19:55 PM
Economic Summary
- Recent local elections (NY, NJ) and redistricting outcomes illustrate a divided U.S. electorate, which may subtly influence market sentiment and midterm expectations but is unlikely to produce immediate market-moving policy shifts.
- Valuation concerns are widespread, but flows into ETFs and momentum-driven investing matter more right now; many investors buy ETFs regardless of individual stock valuation, muting valuation-based selling.
- Market breadth has deteriorated: far fewer stocks are making 26-week highs and more names are in downtrends, implying the market is vulnerable to a pullback or correction even as indices trade near highs.
- A rising U.S. dollar (recent multi-month strength) would act as a headwind to corporate earnings and could shift the market to a more defensive tone, reducing tailwinds from currency translation that helped recent EPS beats.
- Sector rotation is occurring: health care is showing renewed strength, exemplified by Exact Sciences (EXAS) benefiting from a technical reversal and steady demand dynamics for at-home testing.
Bullish
- JPMorgan added to tactical portfolio, indicating confidence in select financials.
- Exact Sciences showing technical reversal and decent results amid healthcare rotation.
- Take-Two added for gaming exposure as part of a rotating market.
Bearish
- High valuations have triggered recent sell-offs, exemplified by Palantir's decline.
- Market breadth is deteriorating: more stocks in downtrends despite indices near highs.
- A strengthening U.S. dollar could become a headwind to corporate earnings.
Bullish tickers
JPMTTWOEXAS
Bearish tickers
PLTR
PLTR
Bullish
Has shown earnings strength, but remains vulnerable to valuation sentiment and market rotation.
Bearish
Viewed as a poster child for high valuation; pulled back despite strong earnings, highlighting valuation-driven selling.
JPM
Bullish
Added to the tactical portfolio, signaling conviction in select financials amid rotation.
Bearish
Could face macro and dollar-related headwinds that weigh on revenue and trading activity.
TTWO
Bullish
Included in tactical picks to gain exposure to gaming recovery and selective rotation.
Bearish
Gaming stocks can be cyclical and sensitive to consumer spending and sentiment shifts.
EXAS
Bullish
Technical reversal and decent results; benefits from a health-care rotation and easier consumer testing adoption.
Bearish
Growth may be constrained by consumer out-of-pocket costs and insurance dynamics for testing uptake.
People mentioned
GregFrank