Market Rotation Analysis: Johnson on Momentum, Healthcare Strength, and Bull Market Resilience

This analysis is based on the CNBC Television segment [1] published on November 5, 2025, featuring Craig Johnson, Chief Market Technician at Piper Sandler, discussing current market rotation and resilience patterns.

Current market data strongly validates Johnson’s rotation thesis. The S&P 500 (SPY) shows short-term fatigue with a 1.19% decline to $675.24, while the NASDAQ (QQQ) experiences more significant pressure at -2.03% to $619.25 [0]. This technology weakness contrasts sharply with healthcare’s relative strength, as the XLV healthcare ETF gained +0.45% to $145.10 [0]. The sector performance data reveals a clear defensive rotation pattern, with Consumer Defensive (+0.63715%) and Basic Materials (+0.31614%) leading, while Technology (-0.49444%) and Utilities (-0.85236%) lag [0].

Johnson’s emphasis on momentum over valuations appears particularly relevant in the current environment. Healthcare’s technical resilience demonstrates this principle effectively - XLV trades above its 20-day moving average of $144.25 with elevated volume of 14.16M shares (above the 12.16M average) [0]. The sector’s 30-day performance of +6.05% (from $136.82 to $145.10) significantly outperforms the broader market’s modest 1.61% gain over the same period [0]. This momentum-driven outperformance occurs despite elevated valuations across sectors, supporting Johnson’s thesis that market psychology and price trends currently outweigh fundamental valuation concerns.

Despite short-term fatigue indicators, the underlying bull market structure remains intact. The S&P 500 maintains a substantial distance from its yearly lows, with a 52-week range of $481.80 - $689.70, currently trading at $675.24 [0]. Johnson’s credibility is enhanced by his previous accurate prediction of S&P 6,600 targets [2], suggesting his technical analysis framework remains effective. The market’s ability to rotate leadership rather than experiencing broad-based selling indicates healthy market dynamics characteristic of ongoing bull markets.

The healthcare sector’s emergence as a market leader represents a significant structural shift. XLV’s consistent outperformance, technical strength above key moving averages, and above-average volume suggest institutional repositioning [0]. This rotation provides the market with new leadership to sustain advances, particularly as technology faces headwinds from valuation concerns and potential regulatory scrutiny.

The current market weakness may represent necessary consolidation rather than bull market termination. The S&P 500’s pullback from its 52-week high of $689.70 to $675.24 [0] constitutes a modest 2.1% decline, well within normal bull market correction parameters. This fatigue allows for sector rotation and reduces extended overbought conditions, potentially extending the bull market’s duration.

Key technical levels provide crucial context for Johnson’s bullish outlook. The S&P 500 maintaining support above $650-660 range [0] and healthcare’s ability to hold above $143-144 support [0] would confirm market resilience. Volume patterns and breadth indicators will be critical for validating whether rotation can sustain market advances.

The analysis reveals several risk factors that warrant attention:

• Valuation Extremes
  : Despite Johnson’s dismissal of valuation concerns, elevated multiples across sectors could limit upside potential and increase vulnerability to negative surprises [0]
• Sector Concentration Risk
  : Over-reliance on healthcare for market leadership creates concentration risk if the sector faces headwinds from policy changes or earnings disappointments
• Technical Breakdown Vulnerability
  : Key support levels failing, particularly SPY below $650-660 or XLV below $143-144, could accelerate declines [0]
• Economic Data Deterioration
  : Weakening fundamentals could eventually override momentum-driven price action

Current market conditions present several tactical opportunities:

• Healthcare Momentum
  : XLV’s technical strength and relative outperformance suggest continued near-term upside potential [0]
• Rotation Beneficiaries
  : Consumer Defensive and Basic Materials sectors showing early signs of leadership transition [0]
• Entry Points
  : Short-term fatigue may provide attractive entry levels in quality names within strengthening sectors
• Diversification Benefits
  : Sector rotation opportunities for portfolio rebalancing and risk management

The market is experiencing a healthy rotation pattern with short-term fatigue but maintaining underlying bull market structure. Healthcare has emerged as a clear leadership sector, demonstrating technical strength with XLV trading above key moving averages and showing +6.05% 30-day performance [0]. The emphasis on momentum over valuations appears validated by current price action, though valuation risk remains a background concern. Key monitoring points include S&P 500 support levels around $650-660 and healthcare sustainability above $143-144 [0]. The market’s ability to rotate leadership rather than experience broad-based selling suggests the bull market remains intact despite short-term consolidation.