Tech Plummets, Value Rises: The Great Market Rotation

Fresh news and strategies for traders. SPY Trader episode #1417. The market is experiencing a massive rotation following a techled selloff fueled by extreme valuation risk (P/E ratios nearing 2000 levels). While the Nasdaq tumbled (PLTR, NVDA leading losses), 83% of S&P 500 companies are beating earnings, signaling strong fundamentals outside of concentrated tech. Capital is fleeing growth and flowing into defensive sectors like Financials and Health Care. The strategy advises positioning in value (XLF, XLV) and maintaining broad diversification (VTI) until valuation clarity returns to tech.

Episode Transcript

(00:00):
Welcome back to Spy Trader .
I'm your host , Penny Stockerton , and we are tracking the early movements after a seriously shaky trading day .
It's 5 am on Wednesday , November 5th , 2025 , Pacific time .
The US market is fighting back this morning , currently showing mixedtomildly positive movements following yesterday’s significant technologyled selloff .

(00:25):
The big story remains valuation risk .
The S&P 500's P/E ratio is reportedly nearing levels last seen in the year 2000 , fueling correction fears and leading to major divergence between sectors .
In yesterday’s carnage , the Nasdaq Composite tumbled 2.1% , dragged down by AI stocks .

(00:46):
The S&P 500 dropped 1.2% .

But listen to this (00:49):
the Dow Jones , which is heavier on industrial and value names , showed relative resilience , dropping a milder 0.5% .
The immediate catalyst for the volatility was the intense reevaluation of highgrowth tech names .
Palantir Technologies , or PLTR , plunged 8–9% despite beating Q3 earnings .

(01:13):
Why ?
Its pricetosales ratio of 85 was deemed simply too high .
Similarly , AI chip leader Nvidia dropped 4% , a move compounded by news that a wellknown hedge fund manager , Michael Burry , revealed short positions against both PLTR and NVDA .
However , let’s look beyond the tech drama .

(01:35):
The overall earnings season remains robust .
A massive 83% of S&P 500 companies are exceeding forecasts .
This shows corporate fundamentals are solid , provided you look outside the overly concentrated , overvalued tech segment .
We saw this strength in action , with DuPont de Nemours , ticker DD , jumping 8.85% and Yum !

(01:57):
Brands , YUM , gaining 7.30% after their earnings beats .

The analysis here is simple (02:03):
this is a major rotation from growth into value and defense .
Capital is fleeing the sharply negative Technology sector , which fell 2.67% , and flowing directly into areas showing resilience .
Financials , driven by stability in major lenders like JPMorgan Chase , JPM , were up 0.52% .

(02:28):
Health Care and Consumer Staples also posted positive gains , confirming the move to defensive safety in the face of slowing but still positive economic growth and persistent inflation .
Given the volatility and valuation warnings , the trading strategy for the next few hours should be focused on defense and value rotation .

(02:50):
First , position defensively .
Look at the Health Care Select Sector SPDR Fund ( XLV ) or the Financial Select Sector SPDR Fund ( XLF ) , as these sectors are clearly attracting capital due to their reasonable valuations and strong earnings reports .
Second , maintain diversified exposure .

(03:12):
Since 83% of S&P 500 companies are beating estimates , don't panic out of the market .
Consider an instrument like the Vanguard Total Stock Market ETF ( VTI ) to capture that broad positive fundamental strength while avoiding the concentration risk that is crushing the Nasdaq .

(03:33):
Finally , for selective growth , wait for clarity .
We need to see if the recent Nasdaq tumble forms a technical bottom .
Hold off on large inflows to the Invesco QQQ Trust ( QQQ ) until valuation fears truly subside , despite the fact that underlying business fundamentals for companies like Nvidia remain powerful .

(03:56):
That's it for this update .

Stay safe out there , and remember (03:58):
trade smart , not hard .