Tuesday’s big stock stories: What’s likely to move the market in the next trading session

The S&P 500 and Nasdaq Composite hit fresh records, with Alphabet poised to extend its nine-day winning streak, up 9% in that period and nearly 30% over three months, though its RSI suggests it may be overbought. RTX also saw strong performance, reaching a new high with a 20% gain over three months. The Invesco S&P 500 High Beta ETF hit an all-time high, reflecting strength in market-sensitive stocks, while Cal-Maine Foods is set to report earnings amidst falling egg prices.

Analysis

The market is exhibiting strong bullish momentum, evidenced by the S&P 500 and Nasdaq Composite reaching new records, and further confirmed by the Invesco S&P 500 High Beta ETF (SPHB) hitting an all-time high. This risk-on sentiment appears concentrated in specific large-cap tech and industrial names. Alphabet (GOOGL) has been a key driver, with a nine-day winning streak contributing to a nearly 30% gain over three months; however, its Relative Strength Index (RSI) now stands at 72, a technical indicator suggesting the stock may be overbought. Performance divergence is stark within sectors, particularly in defense, where RTX has surged 20% in three months to a new high, while peers Lockheed Martin (LMT) and Northrop Grumman (NOC) remain down 26% and 7% from their respective highs. A similar disparity exists within SPHB's top holdings, where Nvidia's recent high contrasts sharply with significant drawdowns in Super Micro and Microchip Technology. Upcoming earnings from Cal-Maine Foods (CALM) will test its recent 18% three-month rally against a backdrop of falling egg prices, with national averages projected to drop from $5 to $3 per dozen next year, posing a potential headwind to future revenue.

Key Decisions for Investors

• Given Alphabet's extended rally and an overbought RSI of 72, investors may consider taking partial profits on GOOGL positions while monitoring for signs of price consolidation.
• The significant performance gap between RTX and its defense peers like LMT and NOC suggests investors should evaluate a potential rotation into outperforming names or consider pair trades within the sector.
• Exercise caution with Cal-Maine Foods ahead of its earnings report, as the stock's 18% three-month appreciation may not fully price in the negative impact of sharply declining egg prices on future profitability.
• While the High Beta ETF's new high signals a risk-on environment, the underperformance of several key components suggests investors should conduct due diligence on individual high-beta stocks rather than assuming broad-based strength in the segment.