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In the last week Technology stocks, and chip stocks in particular, have staged a very impressive rally off of a really low base.

Nvidia (NVDA), for example, is up 17.43% in the week that ended on July 21. That still leaves the stock down 39.43% for the year.

Advanced Micro Devices (AMD) is up 15.36% in the last week. And it’s still down 37.85% for 2022.

Qualcomm (QCOM) is up 1.85% for the week. And down 16.26% for the year.


But I’d be more inclined to see this as a sustainable rally if stocks were rising across the board–with tech and chips leading the way, perhaps.

Instead what I’m seeing is a rotation from safe and less risky stocks. Utilities, for example. And into riskier stocks. That kind of shift in sentiment can get reversed really quickly. The gains would be more sustainable over a longer period if they reflected an increased optimism about general economic or monetary conditions.

In the last week, for example, Duke Energy (DUK) is down 3.67% and Dominion Energy is off 3.67%.

Yesterday, July 21, is a good example of this market rotation. Yesterday Nvidia closed up 4.80%, Advanced Micro Devices up 4.13%, and Qualcomm up 2.94%.

Duke Energy, on the other hand, was down 2.42% and Dominion Energy was off 2.58%.

The next tests for this risk-on, chip rally comes on July 27 with Qualcomm’s earnings report and on August 2 with earnings from Advanced Micro Devices. Guidance from these companies that highlights slowing revenue growth ahead would be in all likelihood enough to reverse recent positive sentiment on the sector. Nvidia, which is quite probably the key to sentiment, reports much later on August 24.