Joel Elconin – Keep An Eye On The Violent Rotation Trade Under The Surface Of US Equity Markets

The KE Report Jul 3, 2026

Summary

The guest sees violent rotation as the quarter turns, with former leaders Micron and SanDisk flushed hard while small caps and drug stocks lead.

Asked about commodity names already below their 50-day and 200-day averages, the guest advises exiting rather than buying more.

Oil trading near 68 on the future is the market's one clear positive for inflation, though sustained deflation could turn uglier.

Quarter-end window dressing lets funds buy names purely for appearances, then unwind, which the guest says amplified this quarter's selling.

He is moving from neutral to bearish for the rest of the year because stock prices have run far ahead of fundamentals.

Top takeaway His headline call is bearish: he says he is bearish until otherwise notified for the balance of 2026, having moved from trying to remain bullish to neutral because he does not see markets living up to the expectations that stocks have been priced into.
His rotation thesis is that leadership has become laggard status, with money moving out of the crowded names into small caps, financials, staples, utilities and biotech; as long as money rotates from one asset class to another the dips stay manageable, but if it goes to the sidelines instead, he warns the rotation can morph into a sell-everything market.
On levels, he points to the S&P cash cracking below its 50-day moving average near 7,434 and trading around 7,394, treating that as resistance and a possible trap door toward 7,300, 7,200, 7,000 or 6,800, with the 200-day near 6,943 as his next line in the sand.
His valuation objection is explicit: a forward P/E of about 145 is ridiculous and priced to perfection far into the future, and names like Intel now have to blow away their next earnings report, which he doubts.
He discloses his own discomfort with his positions: he holds Micron, SanDisk and Western Digital through the week's flush and says he wants to sell Intel right now, and he rejects chasing a portfolio up 9% in a quarter as volatility he does not want.

Top takeaway The host frames the session around quarter-end rotation and book squaring, coming on the end of a month, quarter and first half of 2026, and asks whether funds buying late in the quarter were doing window dressing after Micron and SanDisk rallied on earnings beats.
He presses on where the money is going, asking about financials, healthcare, biotech and retail, and notes that his own KE Report commodity holdings sit below both the 50-day and 200-day moving averages and the 50-week, asking what counts as next support in that case.
He asks what Elconin has on his radar for the second half of the year, citing midterm elections and continued uncertainty around the Iran MOU.
His own risk contribution is that this may be a re-asset allocation rather than a sell-everything call, and he closes by noting the VIX still looks fairly complacent and that investors will have to manage the coming dips and rips.