Who’s Leading the Market After Last Week’s Tech Wreck

Hey trader,

Last week turned into another tech wreck. The sector performance rankings told a different story than the headlines did.

The selloff came right after a false move higher on the day after the midterm elections. A false move is a breakout that reverses quickly. This one gave way to heavy selling across the Nasdaq.

The anti-AI rhetoric is heating up. Tech is taking the brunt of it.

Even so, one group with real AI exposure finished the week in first place.

That result tells me the AI trade in the U.S. still has a pulse. It also tells me exactly what to watch this week. Bears are now on the clock, and three sectors will show us whether they can keep control.

Let’s start with the latest sector performance rankings.

What the Sector Performance Rankings Say About AI

Communications took the top spot over the past week. I’ll admit that one surprised me.

Tech and the Nasdaq were in the middle of a bloodbath. I expected the sectors tied to AI to get dragged down with them.

The communications sector holds the big social media, search, and entertainment platforms. Plenty of those companies lean heavily on AI. Their strength in the sector performance rankings tells me the AI theme in the U.S. took a hit without getting knocked out.

That doesn’t mean every AI trade deserves your money right now.

This weekend, I wrote about the imminent shift in the AI trade toward the Chinese market. Last week, I pointed to biotech as a new frontier where AI can keep its thematic dominance.

The hyperscalers and the memory trade sit in a different spot. Hyperscalers are the giant cloud companies spending billions to build AI data centers. Memory stocks sell the chips that feed those data centers.

I’d forget about both for now. There are much greater opportunities elsewhere.

Energy Is Still Tied To AI

Energy still leads the sector performance rankings year-to-date. It also leads on a 1-year basis.

Oil got hit hard last week. That makes energy a spot to watch closely.

Oil headlines usually focus on supply. Production quotas, inventories, and shipping routes grab most of the attention.

Demand matters just as much. AI data centers burn enormous amounts of power. That ties energy demand directly to the AI trade.

AI has also been the primary driver of economic growth in recent quarters. When the AI trade cools, energy demand feels it.

Don’t let supply-side distractions in energy make you forget about the demand side.

What Bears Need From the Sector Performance Rankings

Healthcare leads the 30-day sector performance rankings. I’m paying attention to that because healthcare is one of the classic defensive sectors.

Defensive sectors tend to hold up when investors get nervous. People still buy groceries, pay electric bills, and see the doctor no matter what the market does.

Bears had a strong week. They’ll need to reassert themselves again this week to keep the pressure on.

I’ll know they’re pulling it off if these three sectors resume near-term leadership:

• Consumer staples (XLP), which hold the household names behind everyday purchases like food and cleaning supplies
• Utilities (XLU), which run the power grid and tend to pay steady dividends
• Healthcare (XLV), which already leads over the past 30 days

If those three climb back to the top of the sector performance rankings, bears are maintaining their momentum. I’d expect more pressure on tech in that scenario.

If communications holds onto first place, last week’s bullish whisper is getting louder. That would tell me buyers are still willing to step into AI names with real earnings power behind them.

Pull up the sector performance rankings at the end of this week. Check whether staples, utilities, and healthcare took the top spots or whether communications held on.

That one check will tell you who’s talking and who’s walking.

I told you there are much greater opportunities right now than the hyperscalers and the memory trade. I didn’t name them here.

I save that for Trinity Trades. Members see the setups my Trinity Terminal flags, the levels I’m watching, and the trades I’m taking as this rotation plays out.

The leaderboard will tell everyone else who won this week. Trinity Trades members will already know how I’m positioned.

Click Here to Learn More.

Talk soon,
Gianni Di Poce