Joe Terranova is not counting on recent rallies in many high beta stocks. As a result, a senior director at Virtus Investment Partners dumped shares of Microsoft and Tesla in a quarterly rebalance of the Virtus Terranova US Quality Momentum ETF, he told CNBC’s “Close Bell: Overtime” Tuesday. “Momentum is not there in the market right now, so you rely more on quality,” he said. “This is also one of the reasons why I don’t trust the nature of the high-beta rally right now, and many Nasdaq stocks are looking at this incredible performance recovery after the decimation they get in 2022.” Terranova cited a “decline in momentum” among the reasons for writing off the stock. He also attributed the rotation out of Microsoft to the recent quarterly results showing a deceleration in revenue growth. TSLA YTD mountain Tesla shares surged nearly 41% in January The stock has just wrapped a blowout month after the worst year for stocks since 2008. The S&P 500 rose 6.2% for its best January since 2019 due in part to a rally in high-beta names, such as tech friends 2022. Some of January’s best performers include the companies with the biggest declines in 2022. Tesla shares, for example, are up nearly 41% this month. Last week was the EV giant’s best since May 2013. Shares suffered in 2022, down 65%. But Terranova doesn’t expect this momentum to last, nor does it expect the continued performance of the Nasdaq Composite after a 10.7% rise in January. “In high beta, I think this is another bear market rally,” he said.