Battered Stocks

A confluence of structural, macro, technical, and behavioral forces sets the stage for a sharp rebound in a select basket of battered equities.

• Mutual fund tax-loss harvesting
• The Fed’s pivot toward easing
• Deeply oversold technical conditions
• Institutional performance-chasing

1. Tax-Loss Harvesting Unwinds

Heavy 2024 selling was driven less by fundamentals and more by mutual funds aggressively harvesting losses to offset gains elsewhere. This created forced selling pressure in underperformers like:

• TerraWulf (WULF)
• Fluence Energy (FLNC)
• Microvast (MVST)
• Enovix (ENVX)
• Enphase (ENPH)

As the calendar resets, the artificial supply of shares abates — historically setting the stage for January–March recovery rallies in punished names.

2. Interest Rate Cuts – A Small-Cap Tailwind

The Fed is entering an easing cycle after its most aggressive tightening in decades. Historically, small caps outperform during early rate-cut regimes as their higher leverage and sensitivity to financing costs amplify gains. MVST, FLNC, ENVX, and WULF stand to disproportionately benefit from improved liquidity conditions.

3. Technical Oversold Conditions

Multiple names in this basket are trading at deeply oversold levels by RSI and moving averages:

• SentinelOne (S) – testing multi-year support
• Enphase (ENPH) – RSI < 30 in recent weeks
• Salesforce (CRM) – approaching long-term moving average support

Sharp technical dislocations often precede violent reversals when combined with positive macro inflections.

4. Institutional Performance Chase

Institutions lagging the “Magnificent 7” are under pressure to close the gap in 2025. As breadth broadens, managers are likely to rotate into high-beta laggards and secular growth names to capture upside. This benefits not only the smaller caps but also quality growth and compounders like:

• e.l.f. Beauty (ELF) – secular consumer brand momentum
• UnitedHealth (UNH) – healthcare ballast with upside in managed care
• Xometry (XMTR) – under-owned digital marketplace exposure

Stock Basket & Positioning

• Energy Transition / Small Cap Growth: WULF, FLNC, MVST, ENVX
• Oversold Secular Tech: S, ENPH, CRM
• Secular Compounders & Catch-Up Plays: ELF, UNH, XMTR

Conclusion

The unwind of tax-loss selling, Fed easing, technical oversold conditions, and institutional chase for performancetogether argue for a broad-based snapback rally in these battered stocks. The asymmetric risk/reward profile favors accumulation into weakness, with catalysts aligned for outperformance into 2025.