Big Tech is tanking but banks just got the green light to buy $50B of stock — ro
Thesis
The S&P 500 is teetering on the edge of a major breakdown entirely due to tech weakness. Yet beneath the surface, JPMorgan and Goldman Sachs just announced massive $50 billion buybacks and dividend hikes after passing Fed stress tests. Simultaneously, small-cap stocks are on pace for their best first-half since 1991. This combination suggests a stealth rotation: institutional money is fleeing expensive, volatile tech stocks and flowing into financially stable banks and smaller companies. Buying the small-cap index (IWM) captures this defensive rotation perfectly.
Strategy approach
Build a long-only momentum strategy on IWM using the daily timeframe. Entry: enter long when IWM closes up >1% for the day while SPY closes down >0.5% on the same day (divergence entry). Exit: 4% profit target or 21-day max hold. Risk management: 3% hard stop loss.