BTIG sees momentum stocks rally nearing historical rebound levels

Investing.com -- BTIG reports that high-beta momentum stocks have rebounded approximately 25% over six trading days following last week's lows, according to a Thursday note.

The firm notes that the median recovery after an initial decline following a boom/bust top is 35% over 14 trading days based on historical patterns. A test of the 50-day moving average would represent roughly a 32% rally from recent lows and would retrace 61.8% of the decline, matching historical averages.

BTIG states that each boom/bust cycle differs, with some retracements nearly reaching previous highs, such as homebuilders in 2006, while others fall short of testing the 50-day moving average, citing ARKK in 2021 as an example.

The firm indicates the equal-weight S&P 500 (AMEX: RSP) has already benefited from an unwind in the momentum trade. From June 22 to July 29, five sectors gained 4% or more. The Mag7 stocks rallied more than 10% from recent lows, with their largest four-day rally of 9.8% since spring 2025. That previous rally came from a 33% drawdown compared to the current 11% decline.

BTIG notes that 10-year real rates are holding above their multi-year breakout level of 2.35%. The firm says markets appear comfortable with current levels, but any spike above approximately 2.50% could present issues.

You May Also Be Interested In

• JPMorgan Double Downgrades Gulfport Energy (GPOR) to Underweight
• Citi upgrades Old Dominion Freight Line to Buy with $223 target
• Perpetua Resources Corp (PPTA) 6800 contracts of January 35 calls trade