In the world of US equities, there has been a noticeable trend towards rotation lately. The latest data from UBS Securities and Trading suggests that this rotation may be more than just a temporary phenomenon. According to their analysis, there was a broad pullback in Tech stocks at the start of earnings season, with profit taking ahead of nonfarm payrolls and potential SCOTUS ruling on tariffs contributing to the decline. Additionally, Samsung’s lower stock price despite a solid print after a massive run may be an indicator that the bar is high again for Tech earnings season.

However, the data also shows that there are signs of rotation again with Consumer space, Housing and Industrials higher. This could be a sign of strength in these sectors, or it could be a cautionary tale of overvaluation. UBS High Touch flows also indicate that hedge funds are net buying, driven by long-only investors, while Tech flows are balanced but leaning towards buying the Consumer space.

So what does this rotation mean for investors? On one hand, it could be a sign of strength in certain sectors, such as Consumer and Housing, which have been performing well recently. This could lead to further gains in these areas. On the other hand, it could also be a cautionary tale of overvaluation, particularly in Tech stocks. If earnings season does not meet expectations, we could see a reversal of this rotation and a pullback in these sectors.