Software climbed almost 6% last week. Chips dropped 2.5% over the same stretch.
Gianni Di Poce is pounding the table on software as it presses against resistance that’s held for months.
That rally runs straight into the AI headlines. The media keeps warning that AI will crash the economy and bury software.
Traders took the other side of that story anyway. Gianni reads the move as proof that sentiment follows price.
This week brought a second encouraging sign. Defensive sectors led the market for three straight weeks before it started.
Utilities finished on top three weeks ago. Consumer staples led the following week.
Energy took the top spot last week. Gianni calls those flows the opposite of what bulls want to see.
Technology stormed out of the gate this week instead. The Nasdaq climbed about 1.25% on Tuesday, with semiconductors up almost 3.5%.
Gianni puts that chip pop in context. Semiconductors have gone sideways for almost six months after an exceptional second quarter run.
He’s called chips dead money for months. He also sees them shaping up as a spectacular trade for 2027.
Gianni bought Broadcom on Monday. He’s careful to note that chips aren’t in breakout mode yet.
The Nasdaq sits back where it traded in the middle of May. It’s spent nearly six months inside the same range.
The last base this long formed as the Nasdaq climbed out of the March market bottom. Gianni likes the old saying that the bigger the base, the higher the space.
The Fed meets tomorrow. Markets aren’t expecting Warsh to raise rates.
Stocks have whipsawed every time Warsh has spoken as Fed chair. Gianni points out that each of those swings handed traders an excellent buying opportunity.
Tonight’s video covers the names and markets Gianni is watching heading into the decision:
- Tesla is the only megacap tech name in the red today. Gianni likes its habit of strong fourth quarter performances after a negative year to date return.
- Apple notched a record high on Friday ahead of earnings. Gianni is long the stock.
- Google trades on support with earnings due tomorrow. Gianni would call it a great stock to get long if earnings weren’t on deck.
- Crude oil bumped into a secondary lower high at resistance. Gianni sees room for a drop toward $84 or $85, which would add a tailwind for bonds.
- Gold and silver offer a strong risk reward setup for completing a low. That view already prompted a couple of trades inside the Trade Desk.
Gianni wants a growth sector to finish this week on top. Technology, consumer discretionary, or communications would hand bulls a very strong case heading into November.
The midterm elections land next week. A split chamber has historically produced the most bullish setup.
Headline risk is very elevated right now. Gianni still calls any dip a gift.
The trend is still up. He has levels mapped on both sides where he’s looking to get long.
