After stocks were bid for about three months straight, we finally saw our first bit of real selling this week. Semiconductors and technology led the selloff, which is a concern given the tendency of those sectors to act as leading indicators. This led to the Nasdaq suffering the brunt of the selloff, as it tumbled lower much more compared to the Dow Industrials or S&P 500. The good news is that this is totally normal price action. That is, it’s not uncommon to see the chips, tech, and the Nasdaq lead on the way up and on the way down. It’s also not uncommon to see the Dow peak after the Nasdaq. One notable exception was the Dot-com Bubble, but during most other market declines, we usually see a flight to safety into the Dow at the expense of the other indices Here’s what that means…  Why the Dow

What a week it was. Between failed assassinations and lower-than-expected inflation reports, it appears that markets are now on a one-way road to September rate cuts. Stocks are at new all-time highs, and the consensus on rate cuts being bullish for stocks continues to grow. I’m pleased with the sector performance rankings that I’m seeing right now. While we’re still “risk-on,” I am noticing some “lower-rate plays” coming into the picture, which is increasing the odds that an economic slowdown is on the horizon. Here’s what I mean…   Real Estate’s Return – Bullish or Bearish?     Check out last week’s top-performing sector: real estate. Granted, this sector consists largely of real estate investment trusts (REITs), but it still offers a decent bellwether in terms of sentiment in the space. If you go online, there’s no shortage of bearish data on real estate. Between banks holding bad loans, to

It’s no secret that the “Magnificent Seven” stocks have been a significant driver of returns to the upside in the indexes. I do, however, take issue with the notion that those are the only stocks pushing this market higher. Of the “Magnificent Seven,” there had been only one real laggard – Tesla. But, in case you missed it, the electric automaker finally snapped out of its funk, and exploded higher in the past couple weeks. Those trading with me in the TheoTrade chatroom were able to capitalize on this move. Here’s how we did it… How Tesla Finally Got It in Gear I’m going to walk you through the technical components of this trade, but first, I want to address the sentiment surrounding Tesla over the past few months. Granted, this isn’t something that can be taught outright. Rather, it comes with experience and observation. Tesla was notably lagging its

Markets are back in full swing this week, and I have to say I was pleasantly surprised by the price action last week. Both the Nasdaq and S&P 500 exploded to new all-time highs, but the Dow continues to lag behind. We also saw a notable rally in precious metals, which together with stocks, has the cleanest uptrend in the market right now. After last week’s surprise, you may be knocked on your heels when you see what the top performing sector last week was. Here’s a spoiler: It isn’t bearish…   There’s a Consumption Dichotomy Playing Out   The top-performing sector in the S&P 500 last week was consumer discretionary. In fact, the rally was so strong, it even overtook consumer staples with respect to year-to-date returns.It’s like a law of nature: When consumer discretionary outperforms consumer staples, it’s a risk-on signal. This is the market’s way of saying

Coming into this year, very few traders and analysts were talking about precious metals. But a few of us here at TheoTrade, myself included, found the prospects in precious metals irresistible. Now, here we are, on the cusp of a potential continuation in the bull trends in both gold and silver.  The backdrop of this rally is what intrigues me the most. We’ve seen a notable shift in some macroeconomic capital flows, and I think there’s still some excellent opportunities brewing in the sector. Check it out…  Miners > Silver > Gold – In That Order There are a few hallmarks of a bull market in precious metals. One is that gold initially leads in a breakout higher to new highs. We’re seeing that now. Another is that silver eventually starts outperforming gold on a relative or percentage basis. We’ve also started to see this. The final, and perhaps most exciting

It’s a holiday week for markets, with exchanges closing at 1PM Eastern on Wednesday, and closing completely on Thursday for Independence Day in the United States. But nonetheless, the market remains on the move. Be sure to take some time away from the screen this week. Admittedly, I have a problem with it too, but since I’m hosting the party this year, I’ll have help from friends and family to unwind for a bit. In the meantime, I noticed a potential shift in sector leadership last week, and if it continues, will be very important for your portfolio. Have a look…  This Leading Sector Is Surprising Have a look at the new one-week leading sector in the S&P 500 – it’s energy. This may be surprising to some considering last Friday’s relatively muted inflation report. Remember that the market is forward-looking, and economic data is backward-looking. Despite the muted inflation

I’m always looking for the next potential market leader. Anyone paying even the slightest bit of attention knows that semiconductors and technology have been the main drivers of this bull market… so far. But for any bull market to sustain itself, there needs to be expanding participation – this market can’t just be a one-trick pony. Lately, I’ve started talking about one particular sector more, and it falls under the umbrella of an even broader, very important sector: Healthcare. Healthcare is the second-largest sector in the S&P 500 behind technology. My thesis here is that there’s one sub-sector within the healthcare umbrella that could provide some huge breakout opportunities. Here’s why I think so…  This Is One Very Impressive Chart Have a look at this long-term monthly chart of the NYSE Biotech Index. As you can see, biotech was a leading sector in the 2010s. In fact, during much of that

My regular daily TheoTrade chat participants will know we’ve entered the exact market environment I wanted to see. Here’s the thing – a lot of pundits out there make it seem like “nobody ever saw it coming” whenever a market pullback occurs. I’m here to tell you that there is nothing further from the truth. Call it laziness or a lack of ability – it does not matter. The talking heads are wrong. The truth is that tops take time to shape up and play out. You’re not just going to wake up one day with the market crashing down – at least not without any signs that it was coming beforehand. But now, we’re starting to see a setup that could signal more volatility in the coming months…  Here’s What I See Coming Around the Corner It’s really no different than weather forecasting. Just because conditions are there for a

Another week is upon us, so it’s time to take the measure of the markets’ behavior we might expect over the next sessions, based on recent sector performance rankings. I have a really cool “risk-on/risk-off” indicator that I’m looking forward to sharing with you shortly, but for now, I’m going to keep it simple and share how we continue to see the right sectors lead at the right time. After all, sector rotation is the lifeblood of bull markets, and there have been some positive developments in the performance rankings just in the last week. Check it out… Stocks Look Bullish for Now To anyone that’s been paying attention, seeing technology as the leader across the board here is not surprising at all. Whether it’s a stock like Nvidia, Apple, Microsoft, or Alphabet – it’s tech’s market, and we’re all just trading in it. But the good news is technology