Rocket Companies Plummets 5%—Is Mortgage Sector in Freefall?

• RKT collapses 5.2% to $13.23, hitting an intraday low of $13.20
• Sector leader PMT rises 0.4% despite soaring mortgage rates near 6.87%
• 52-week range remains volatile: $10.06–$21.38
• Turnover rate of 6.5% signals heavy institutional selling pressure

Rocket Companies' dramatic selloff marks a pivotal moment for the mortgage sector, with the stock plummeting to six-month lows amid a perfect storm of legal, regulatory, and macroeconomic pressures. The contrast with peers like PennyMac (PMT) highlights widening divergence in investor confidence as mortgage rates near 7%.

Legal Headwinds and Rate Pressures Collide
Rocket Companies' freefall stems directly from dual pressures: a resurgent lawsuit tied to alleged appraisal manipulation and relentless mortgage rate increases. The National Mortgage News highlighted ongoing litigation where plaintiffs challenge the company's valuation practices from a decade ago, reigniting concerns about potential liabilities. Concurrently, Optimal Blue data shows 30-year mortgage rates hovering near 6.72%, exacerbating affordability challenges for borrowers—a key demand lever for originators like RKT. The combination of unresolved legal exposure and deteriorating macro conditions has spooked investors, driving the stock to six-month lows.

Mortgage Sector Mixed as Regulatory Uncertainty Lingers
While sector leader PMT ekes out gains, Rocket's struggles underscore growing divergence within mortgage finance. PennyMac's resilience likely stems from its focus on jumbo lending and superior balance sheet management compared to RKT's broader retail operations. However, both firms face headwinds from Federal Reserve policies and CFPB leadership changes. The sector's technicals remain bearish, with RKT's RSI at oversold levels contrasting PMT's more stable fundamentals. Investors are clearly prioritizing companies with clearer regulatory visibility and less litigation exposure.

Bearish Momentum Dominates—Key Levels and Options to Watch

• MACD: 0.15 vs Signal Line 0.26 (bearish crossover confirmed)
• RSI: 40.2 (deep oversold territory)
• Bollinger Bands: Price hugging 13.195 lower band (potential support test)
• 30D MA: 13.71 vs current price 13.23 (bearish cross completed)

Rocket's technicals scream short-term pessimism. The breakdown below $13.76 200-day average confirms a shift to bear market dynamics. Aggressive traders could consider shorting PMT as a sector hedge, given its inverse correlation to RKT's operational challenges. Though options data is unavailable, the stock's proximity to 52-week lows suggests traders should focus on $13.00-$12.67 support clusters. A close below $12.85 would risk triggering a collapse toward $10.06 lows. Bearish momentum remains intact until RSI climbs above 50 or the stock recaptures $14.00 resistance.

Hook: Aggressive bears may target $12.67 support, but avoid chasing shorts below $13.00 without confirmation.

Backtest Rocket Companies Stock Performance
The backtest of Rocket Lab (RKT) after an intraday plunge of -5% shows favorable performance in the following days. The 3-day win rate is 49.05%, the 10-day win rate is 51.58%, and the 30-day win rate is 49.53%. Although the returns are modest, with a maximum return of 0.31% over 30 days, the overall trend suggests RKT has a good chance of recovery after such events.

Breach Below $13.00 Could Trigger Collapse to $10.06 Lows
Rocket Companies' bearish momentum faces a critical test at $13.00 psychological support. With mortgage rates near 6.87% and unresolved legal liabilities, a breakdown risks accelerating losses toward 2023 lows near $10.06. Investors must monitor PMT's outperformance and Federal Reserve policy shifts closely. Action Alert: Stay short until RKT proves it can hold above $13.50 or sector leadership reverses—watch for $12.85 breakdown or regulatory clarity.