It’s been a choppy few weeks in the stock market. From now looking back to the election in November, we’re basically unchanged. This in turn is prompting talking heads to declare the “Trump bump” is over.
I’ll level with you: My trading, and more importantly, my risk management, doesn’t change depending on who holds political power.
If anything, this type of sentiment I’m seeing and hearing now leads me to believe the market chop is nearing its end. But much of it depends on this one very important sector reclaiming leadership in the stock market.
Check it out…
The New Economic Era’s Microscopic “Gears”
It’s no secret that the technology sector has been the main driver of this bull market over the past few years. But interestingly, in 2024, tech wasn’t even the top-performing sector.
However, there’s a special sub-sector within the broader tech space that is critical to much of the innovation that we’ve seen over the past few years.
That sector is semiconductors. Check out this weekly chart of the semiconductor index.
For months now, I’ve been pounding the table with how important it is that the chip sector makes a new all-time high. For perspective, it’s been since July that we last saw a new all-time high.
Here’s the thing: All of these big tech companies need chips for all of their innovative projects. If chip stocks aren’t doing well, it tells me that demand behind the curtain is weakening, and this could portend some larger problems in the overall market.
Fortunately, I see evidence in this chart here that a continuation of the longer-term bull trend could be near.
Naturally, I’ll be keeping you posted on these key sector developments.
Talk soon,
Gianni Di Poce
THEOTrade
