Consumer staples led the market last week. Utilities led the week before.
Gianni Di Poce sees that defensive rotation as a sign the bottom may already be in.
You see, defensive flows tend to show up at or near the market’s cyclical bottom.
In tonight’s video, he names the growth sectors and stocks he wants leading the next leg higher.
His case starts with a washout on Sunday night. Nasdaq futures took out last Friday’s low the moment trading opened, and they’ve rallied ever since.
Gianni reads that move as another flush of overleveraged hands. The VIX spiked last week. Now it’s getting crushed again.
The pullback also reset the board. The Nasdaq, S&P 500, and Dow all dropped back to where they traded in mid September.
The Dow then broke out of a descending price channel. Gianni treats that pattern as a continuation signal inside an uptrend of higher highs and higher lows.
He sees the breakout pointing to at least a retest of the all time high. The Dow hasn’t printed a new record in almost three months.
The calendar adds fuel. Mid October has a reputation as a dip buying environment.
The four year presidential cycle also enters its most bullish stretch from here into the second quarter.
Gianni needs one more piece to fall into place. He wants technology, communications, or consumer discretionary to take over leadership this week.
Here’s what he’s watching in tonight’s video:
- The October 1 lows are Gianni’s line in the sand. Stocks keep a good risk reward setup to the upside as long as those lows hold across the board.
- Tesla is the only stock in the Mag 7, Palantir, AMD, and Broadcom that isn’t up on the year. Gianni owns it ahead of earnings tomorrow.
- Gianni points to Tesla’s notorious bullish seasonal tendencies in the final two months of the year. He sees it poised to benefit from rotation among mega cap tech names.
- Palantir and Microsoft are the strongest mega cap performers since the start of the third quarter. Software has benefited from rotation out of semiconductors.
- Semiconductors are sitting on technical support. Gianni cares most about Nvidia, AMD, Micron, and Intel, and he says it’s too late to panic.
- Gianni still targets $100K in Bitcoin by year end. He sees crypto consolidating its gains ahead of another big move.
Gianni’s rule for this tape is simple. Trade the price, not the news.
