Follow the Flow: 3 Stocks Absorbing the Market's Biggest Rotation

Key Points

• Larry Benedict sees money rotating hard into Mag 7 stocks, with NVIDIA leading the charge after bouncing roughly 44% off its recent lows in just two weeks
• Benedict favors D.R. Horton as a play on anticipated Fed leadership change and a potential interest rate cycle shift that could reignite housing demand
• Oracle stands out as Benedict's top software pick: still well off its all-time highs despite a strong recent rally, with AI infrastructure contracts potentially undervalued by the market

Market volatility has a way of scattering investors—but it doesn't destroy money. It moves it. And right now, Larry Benedict, founder of The Opportunistic Trader and a 40-year market veteran, says he's watching clear rotation into three sectors with specific stocks absorbing the bulk of those flows.

The backdrop is a market that's done something genuinely unusual. After weeks of turbulence, the Nasdaq ripped roughly 20% off its lows while the S&P gained around 12–13%—one of the sharpest recoveries Benedict says he's witnessed in four decades. And yet, he's not ready to call it a new bull run. "I think we're nearer the top end of the range," he says, pointing to persistent geopolitical uncertainty, energy prices, and questions about what comes next for interest rates. He's not ultra-bearish—but he is watching risk.

That watchfulness is exactly what's driving his sector focus.

NVIDIA Leads the Mag 7 Surge

The first and loudest rotation Benedict is tracking is into the Magnificent 7—Apple NASDAQ: AAPL, Microsoft NASDAQ: MSFT, Alphabet NASDAQ: GOOGL, NVIDIA NASDAQ: NVDA, Amazon NASDAQ: AMZN, Meta NASDAQ: META, and Tesla NASDAQ: TSLA. These names, which had been struggling for much of the early year, absorbed a massive wave of inflows during the recent rally and powered the Nasdaq to fresh highs.

The standout is NVIDIA. Benedict watched the stock fall from around $185 to roughly $165 at its low, then recover to over $200 in just two weeks—adding trillions in market cap at a pace he describes as unlike anything he's seen. "That's the big one," he says. "That's the one that's outperforming everything."

With Mag 7 earnings still ahead—NVIDIA traditionally closes out the earnings season—Benedict thinks results will be solid enough to support prices, with the caveat that the quarter after this one may start reflecting economic headwinds. For now, bulls are in control, and he's not fighting that.

D.R. Horton and the Rate-Driven Housing Setup

The second sector seeing real money flow is housing—and Benedict's read here is longer-term than just the recent momentum. He believes the market is underweighting a significant catalyst: a likely change in Federal Reserve leadership. With Kevin Warsh widely expected to step in as the next Fed Chair, Benedict anticipates a pivot toward lower interest rates that could unleash pent-up housing demand.

"I think that will cause a boom in the housing market," he says. From his vantage point in South Florida, where he says he's watched 20 new high-rises go up in his town alone, the demand isn't theoretical—it's concrete.

His preferred vehicle is D.R. Horton NYSE: DHI, the largest-cap homebuilder in the sector. The logic is simple: when expressing a sector view, he wants the biggest and most liquid name.

DHI captures the housing thesis cleanly without the idiosyncratic risk of smaller builders. He acknowledges supply chain pressures could create headwinds, but believes the demand response to lower rates will more than offset them.

Oracle: The Software Sector's Undervalued Rebound

The third area—and the one Benedict seems most energized about—is enterprise software, specificallyOracle NYSE: ORCL. While Mag 7 names have largely reclaimed their losses, Oracle is still a long way from its all-time highs despite a meaningful bounce off its lows.

That gap is the opportunity, in Benedict's view. Oracle's AI infrastructure deals—including significant contracts tied to OpenAI—were the catalyst for its original run to near-trillion-dollar market cap territory. When sentiment turned and the market grew skeptical about AI CapEx spending, Oracle pulled back hard.

Benedict thinks that skepticism went too far. "The market has misjudged what these companies can actually do," he says. He sees Oracle as operating in the same AI infrastructure playing field as the Mag 7, but priced as if it isn't. Compared to fully-valued Mag 7 names, software stocks like Oracle have more room to run—even if the path is bumpy.

The risk is real: if the broader market corrects, software won't be immune. And Benedict is candid about the longer-term AI question, noting that no one knows exactly how AI monetization plays out. The dot-com era is a reference point he keeps close.

But for investors willing to hold through volatility, the setup in software stocks—beaten down, under-owned, and sitting on legitimate AI revenue relationships—is where Benedict sees the most asymmetric upside of the three sectors.

The money is moving. The question is whether you're positioned in front of it or watching from behind.