Hey trader,
The tape flipped hard last week. Stocks closed near the lows with tech and the Nasdaq dragging everything lower.
This is the first time these signals have flashed together since the start of the year. That earlier signal led to a multi-week, double-digit pullback in the Nasdaq.
This setup deserves your attention. By the end of this, you’ll know whether it points to something ugly or plain old rotation.
You’ll also know exactly where I’m hunting for the next entry.
New leadership is stepping in, so let’s break down what it actually means.
Rise-Off Sectors Rise – For Now
|
Performance Leader |
1-week |
30-day |
YTD |
1-year |
|---|---|---|---|---|
|
Sector |
Energy (XLE) |
Healthcare (XLV) |
Energy (XLE) |
Energy (XLE) |
Energy ran the table last week. It was the strongest sector for the second week in a row.
Energy rallied so hard it overtook technology both year-to-date and over the past twelve months. Tech still holds the crown since the start of the second quarter.
Energy and healthcare leading over tech tells you something real. Money is rotating toward safety and value while growth cools off.
This is a cautionary signal. Stocks still haven’t broken down much at the index level.
Even so, I wouldn’t rush into this week leaning hard bullish. Momentum on the bull side is thin right now.
The collapse in semiconductors has a lot to do with it. When the generals retreat, the troops get nervous.
Here’s the part the perma-bears always miss. Drawdowns like this are normal, and they’re the price of admission for the gains that follow.
I’ve watched this pattern play out plenty of times. A correction rarely means the whole run is finished.
How Bulls Turn This Around
Bulls need fresh leadership in growth sectors. That’s the whole ballgame from here.
Inside tech, watch for software to start doing the heavy lifting. The winners will be the companies that deploy AI the best.
That handoff makes sense mechanically too. AI spending flows downstream from the chipmakers into the software and applications built on top of them.
A rotation like that would give semiconductors time to rest and reset. Healthy leadership rotation is what keeps a bull market breathing.
Healthcare backs up the theme. It cemented itself as the top performer over the past month.
Biotech is a big reason why. I read that as another AI story, with the tools moving into drug discovery and diagnostics.
The AI story isn’t going anywhere. It’s simply growing beyond chips and memory.
That broadening is exactly what this bull market needs to survive. Narrow leadership is fragile, and broad participation holds a rally together.
Energy is leading here in the near term. I don’t think it stays in the driver’s seat much longer.
Where I’m Positioned
Positions matter more than opinions. Let me tell you where my head is at right now.
My stance leans defensive to start the week. I’m just waiting right now with the intention of getting long.
This is simple risk management. I’m respecting the tape until the buyers show up in size.
The bigger opportunity is the dip that rounds out in tech over the next couple of weeks. I want to buy that dip, not fear it.
I’m watching the Trinity Terminal for that setup to line up. When the signals turn, I’ll be ready to press.
Be patient. Pick your shots. Don’t let the doom crowd scare you out of the best entries of the summer.
I’ll keep you posted as the setups develop. Reply and tell me which sectors you’re stalking this week.
Take Care,
Gianni Di Poce
