Tech Bloodbath, Sector Breakouts, and a Market Inflection

Sector Rotation Underway: A significant rotation appears to be taking place beneath the surface of the market, with capital flowing out of high-beta technology and software names into traditionally defensive sectors such as Energy (up 2.7%), Consumer Staples, and Healthcare. This shift may signal a broader change in market sentiment and risk appetite.

Volatility Dynamics Limiting Downside: Despite sharp intraday selling in technology stocks, the rapid acceleration in VIX is likely to cap the severity of any near-term selloff. When implied volatility rises too quickly, it typically triggers a snapback rally, suggesting that any meaningful correction would require a more controlled, gradual increase in volatility.