Hey trader,
Stocks staged a nice comeback going into the weekend.
By Friday’s close, the S&P futures hit their highest weekly level in history.
That’s breakout mode, technically speaking. Don’t be surprised if new all-time highs start printing in the S&P soon.
Here’s why that matters for your week ahead…
New highs are only half the story. The other half is who shows up to lead the charge, and last week’s internals are flashing a warning that bulls need to see.
The Nasdaq grabbed the biggest bid out of the large cap indices last week. That’s a good sign on the surface.
But the real test comes from leadership. Based on what we saw internally last week, bulls still have work to do before I’m ready to call this clean.
I’ve watched this movie before. Breakouts without the right sectors leading tend to fail fast, and
I’ll show you exactly what to watch for below.
Rotations Aren’t Slowing Down – Good
|
Performance Leader |
1-week |
30-day |
YTD |
1-year |
|---|---|---|---|---|
|
Sector |
Energy (XLE) |
Financials (XLF) |
Technology (XLK) |
Technology (XLK) |
Energy was quietly the strongest sector last week. It was a neck-and-neck race with tech going into Friday’s close, but energy edged it out at the wire.
Here’s the part that should make bulls sit up. Energy is notorious for outperforming in the late stages of market cycles, and this rally is now in its 15th week off the March lows.
If energy leadership extends into this week, that’s a signal worth respecting. One week of energy strength is noise. Two or three weeks in a row, late in a rally, is a pattern.
I’ve seen this setup rhyme with old cycles more times than I can count. It doesn’t mean the rally is over. It means bulls need better sponsorship, and fast.
The good news: technology is still the year-to-date and one-year leader. This remains a rotating market, and tech looks poised to reclaim leadership across every timeframe once it gets its footing back.
Biotech and healthcare took a breather last week. That opened the door for financials to grab the top spot on the one-month interval.
A few things worth knowing about that rotation:
- Financials are the second-largest sector in the market, so this isn’t a minor move
- Big bank earnings hit this week, and the market has a habit of sniffing out strength before it’s reported
- Consumer discretionary is quietly worth watching too, even though it’s not topping any list yet
None of this changes my intermediate and long-term thesis. Corrections and rotations are normal. I’ve got the historical data to back that up, and perma-bears calling tops for six months straight have been wrong the whole way up.
Positions matter more than opinions. When the data gets shaky, I’d rather short with the intention of getting long than sit out entirely.
That’s actually the setup the Trinity Terminal is flagging right now. It’s been picking up early rotation signals before they show up in the headlines, and this week looks like another one of those moments.
What This Week Will Tell Us
This week’s leading sector tells us whether bulls still have control. If energy keeps winning, I’ll play more defense. If tech or financials retake the crown, I’m adding risk.
Growing up in Michigan taught me one thing about weather and markets both: don’t trust a forecast, watch what’s actually happening outside.
Watch the sector leaderboard this week like your portfolio depends on it. Because it does.
Take Care,
Gianni Di Poce
