Tim Seymour: Higher yields and hawkish central banks add headwinds to momentum trades

• The momentum unwind entered a 'panic phase' yesterday, characterized by forced liquidation and outsized declines.
• Semiconductors (SMH) are currently at key support levels, mirroring their March bottom, and momentum is at its most oversold level in three years.
• Higher global bond yields and hawkish central bank stances (Fed, BoJ) are significant headwinds for momentum trades, with a 5% 10-year yield potentially choking momentum.
• The equal-weighted S&P (RSP) has been outperforming the market-cap weighted S&P 500, indicating market broadening built on fundamental margin and EPS growth.
• The playbook involves playing oversold trades like semis for potential 10% gains, and favoring gold and commodities which could benefit from a weaker dollar.

Tim Seymour discusses the recent 'panic phase' in momentum trades, highlighting the impact of global central bank policies, particularly the Fed and Bank of Japan, on bond yields and market dynamics. He notes that while higher yields pose headwinds, oversold sectors like semiconductors, gold, and commodities present potential trading opportunities, supported by market broadening.