Hey trader,
Last week ended with a gut punch. Stocks got slammed into the close as profit-taking ripped through the high-flying growth names.
Tech took the brunt of the damage. What slipped under the radar were the other sectors that quietly caught bids while everyone watched the carnage.
Here is why that matters for your money this week. The selling was one over-exaggerated rotation. The underlying trend has not changed one bit.
Stick with me. I’ll walk you through what the sector internals are flashing.
I’ll show you exactly how I’m thinking about positioning around it.
Near-Term Pain, Long-Term Gain
The tech wreck opened the door for other sectors to step up. Here is where the leadership landed across the timeframes that matter:
|
Performance Leader |
1-week |
30-day |
YTD |
1-year |
|---|---|---|---|---|
|
Sector |
Energy (XLE) |
Healthcare (XLV) |
Energy (XLE) |
Technology (XLK) |
Whenever energy climbs back into the picture, a healthy dose of caution is warranted. Rising energy costs tend to squeeze consumers and companies at the same time.
What grabs my attention most is healthcare taking over the 30-day leadership spot. Healthcare leans defensive. That kind of leadership usually shows up when the big money starts turning cautious.
Stack healthcare’s defensive strength on top of energy’s one-week run. Then add energy reclaiming the year-to-date crown from tech.
Put it all together and the internals are telling us to respect some caution as the week opens. That is the read I’m starting with.
Even so, technology still holds firm as the one-year leader. Longer-term trends tend to overpower short-term noise every single time.
That is why I’m open to a little more short-term pain in exchange for long-term gain. Pullbacks like this are a normal feature of healthy uptrends.
My stance stays simple. I respect the primary trend and keep cash ready to put the dip to work if the selling stretches further.
Why Crude Oil Holds the Key
Energy was the strongest sector last week. Even with that strength, there is a good chance crude oil just carved out another lower high.
Last week also delivered a blowout jobs report. With the labor market running that hot, the one thing that can keep the Fed from hiking in the near term is a containment of energy prices.
That puts crude oil right at the center of the story. Do not be surprised if this summer turns into a grind to push crude back down toward the $75.00 to $80.00 range.
A cooler crude price takes pressure off the Fed. That keeps the long-term bull case fully intact, which is the outcome I’m positioned for.
Here is your edge over the crowd. Build your buy list now, while the headlines scream and everyone else freezes.
I’ll be tracking these crude levels and sector shifts in the Trinity Terminal as the week unfolds. Stay disciplined, keep that list ready, and let the long-term trend do the heavy lifting.
Take Care,
Gianni Di Poce
