Gianni Di Poce pinned this pullback on a single sector. Energy was the top performing sector last week. That one fact puts the bullish case on hold.
Tech and energy now sit neck and neck for the best performing sector of the year. Gianni treats that race as the real scoreboard.
When tech pulls ahead, the tape turns bullish. When energy pulls ahead, the tape turns bearish.
Every time crude oil finds strength, tension builds underneath stocks. We watched it happen again today.
The S&P 500 fell about 47 points. The index hovered near the lows of the day.
The Nasdaq absorbed the brunt of the selling. The Dow barely budged.
Gianni still calls this a fantastic dip buying opportunity. He sees the market one domino away from bulls reasserting momentum.
That domino is energy. Crude has to pull back.
The futures curve supports him. Oil sits in massive backwardation stretching into the March through May window of next year, which points to prices subsiding further out.
Bonds handed him a second clue today. The 30 year bond dropped to a new low. The 10 year note refused to follow.
Gianni has been hunting a low of significance in bonds, not a new bull market. A multi month rally inside that downtrend would be a massive tailwind for stocks.
Chips got whacked again. Software held its ground.
Here is what Gianni broke down in today’s session:
- The 30 year bond printed a new low while the 10 year note held above its August low. Gianni reads that divergence as the low of significance he has been waiting for.
- Salesforce ran over 4% on the day as a Dow 30 component with earnings a couple of weeks out. Gianni sees it leading a software resurrection next to Microsoft and Palantir.
- Amylyx Pharmaceuticals jumped over 56% on drug trial results inside the Trinity Trades portfolio. Gianni holds a good til canceled order to sell half the position at his $35 target.
- Crude oil sits in backwardation into the spring of next year. That curve points to oil prices easing, which is the last domino bulls need.
- Bitcoin closed higher two days running while stocks sold off. A pop to 75,000 or 78,000 still would not print a clean higher high, so Gianni warns to respect bear market rallies.
Healthcare finished strong and outperformed energy. Biotech is showing the same relative strength.
Precious metals are dipping with everything else. Gianni sees another dip buying setup forming there.
Crypto has tracked the software sector for years. That correlation is why he is watching Bitcoin closely into the White House crypto summit.
Big options expirations land this week. Keep that inside the context of every move you see.
