Joe Terranova doesn’t trust the recent rally in a slew of high-beta stocks. As a result, the senior managing director at Virtus Investment Partners dumped shares of Microsoft and Tesla in the quarterly rebalance of the Virtus Terranova U.S. Quality Momentum ETF , he told CNBC’s ” Closing Bell: Overtime ” Tuesday. “Momentum is not present in the market right now, so you’re relying more on quality,” he said. “It’s also one of the reasons why I don’t trust the high-beta nature of the rally currently, and a lot of the Nasdaq stocks that are seeing this remarkable performance recovery after the decimation that they received in 2022.” Terranova cited a “loss of momentum” among his reasons for ditching both stocks. He also attributed his rotation out of Microsoft to recent quarterly results showing a deceleration in revenue growth . TSLA YTD mountain Tesla shares surged nearly 41% in January Stocks have just wrapped a blowout month after the worst year for stocks since 2008 . The S & P 500 surged 6.2% to notch its best January since 2019 due in part to a rally in high-beta names, like 2022’s battered tech darlings. Some of January’s best performers included companies that suffered the sharpest declines in 2022. Tesla shares, for example surged nearly 41% this month. Last week was the EV giant’s best since May 2013 . Shares suffered in 2022, slumping 65%. But Terranova doesn’t expect this momentum to last, nor does he anticipate continued outperformance from the Nasdaq Composite after its 10.7% surge in January. “In high beta, I think it’s another bear-market rally,” he said.
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