The Momentum Rebound: How to Trade it 7/6/26

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**Scott Wapner** (1:00)
I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.
Carl, thank you very much. The mic is hot. That's what we learned over the last 15 minutes or so.
It's nice to be with all of you. We're in the front and center of this hour, the state of momentum, that part of the market staging a nice rally today. We discuss and debate whether you should buy the Bounce. We have SpaceX set to join the NAS 100 We're all over all of it with the committee, as always. Joe Chernovich, Jim Blaventhal, Steve Weiss, Rob Seachen. In the house here at Post 9, we'll check the markets. We did have the Dow above 53,000 first time ever, albeit briefly this morning. But Russell 2000 having a nice day. It is the NASDAQ that is the winner. And the big story is clearly the momentum rebound. It is up sharply. The chips are rallying. I turned to our expert in the momentum factor. He is Joe Chernovich sitting right to my left. What do you make of this today?

**Joe Chernovich** (2:01)
From the perspective of what is the effect on the market overall, I think we had this unwind in momentum over the last several days. And the resiliency of the broad market was very powerful. So that's a good condition.
I think what you're seeing today is nothing more than a rebound. I think it has to prove itself out, this momentum rebound specifically as it relates to semiconductors and memory names. As we get through the week, we will have Samsung's earnings. We will have SK Hinex IPO probably on Friday. And then next week you have ASML and TSMC. So it has to prove itself. In the interim, it really validated the resiliency of the market. The last thing I will say, though, it is leading to a de-leveraging in particular for systematic funds and quant funds. They are beginning to reduce exposure significantly as it relates to technology. The effect of that brings elevated volatility on the other side. So keep that in mind. I think we're going to continue to see very wild swings in the NASDAQ, very wild swings in the names like Marvell, Corning and Micron.

**Scott Wapner** (3:13)
Okay, Goldman's trading desk, Rob, has an interesting note about momentum. It's now down 24% since the peak. Worst sell-off since the first quarter of 2023, versus an average drawdown of roughly 12%.
Barring a regime change, buying the dip in momentum has historically paid off, and the magnitude of the current move is likely a function of lower liquidity and a bit of summer fatigue. In other words, don't get too caught up with a real dramatic shift in how momentum was trading. It's gonna reverse itself, and you would be wise to buy the reversal. What do you think?

**Joe Chernovich** (3:52)
I think we agree with that. You know, there's some out there that are saying price leads, price sell-off leads to business sell-off and a re-rating in the group. But we're buying in the weakness in the group, and historically that's been rewarded. If you look at the last corrections, and we've seen 10 double-digit corrections, Scott, in the semi-industry over the last five years, and still that has generated more than 30 percent annualized returns. So we maintain our modest overweight to the group, roughly 20 versus 18
And it's been long standing, it's served us well, and I don't think we have any intention of reducing it.

**Scott Wapner** (4:37)
Why is this the biggest story in the market, I think? Because it had people thinking that you had a regime change going on here that these stocks, which had led you in many respects on the way up, we're going to lead you on the way down unless there was a significant rotation into other areas of the market. If you look at all of these names today, the Microns, the Marvells, 3%, Intel's up 3%, AMD's up 9%, you get the idea of where these stocks had gone over a one week period of time, leading that factor to the downside. Significant losses, Micron in a week down 10.5%, KLA 10 core down 11.5%, and so on and so forth.