Hey trader,
Last week delivered one of the biggest signals the market has produced in months.
Most traders were already checked out ahead of the Friday holiday. They missed something important.
The Nasdaq led the charge back higher. That alone is encouraging. But one of the internal signals I have been waiting for in the market finally triggered last week.
The bears are not finished yet. But they are officially on notice.
Sentiment remains overwhelmingly bearish, which makes the timing here almost too good.
I’ve been saying for weeks that tech would come back to life when things looked the bleakest. We are now seeing the first real evidence of that thesis playing out.
That’s why we’re going to dig into what exactly shifted.
Because once we understand why it matters, we can then map out what the bulls need to do next before they can declare victory.
Growth Is Forgotten No More
The capital shifts that occurred last week were massive. There is no shortage of doom and gloom right now, and understandably so.
This is probably the worst geopolitical environment in years. But the market has a knack for pricing in the future today.
Nobody knows how long this conflict could last. That includes the talking heads on television.
I have a hard time believing everything is on the verge of falling apart when technology absolutely dominated the tape last week. Tech outperformed by such a wide margin that it knocked energy out of the 1-year leadership position.
For weeks, energy held a clean sweep across every timeframe. That sweep is now broken. Technology reclaimed the 1-week and 1-year spots in a single week of trading, and the implications are significant:
- Technology now leads the 1-week and 1-year timeframes, restoring strength on both ends of the spectrum
- Energy still holds the 30-day and year-to-date positions, meaning the intermediate trend has not fully turned
- The bearish structure that dominated for months has cracked, but it has not collapsed
I still need energy removed from the 30-day and year-to-date spots before the rotation is complete. But last week was the first real victory for the bulls in months.
What Comes Next
This is the exact setup the bulls needed. Their work is far from complete.
The bears will point to the remaining energy leadership as proof that nothing has changed. These are the same people who have been calling for a crash and have nothing to show for it.
Sentiment is doing the heavy lifting here. Positioning is overwhelmingly bearish, short interest is elevated, and cash levels are high. These are the conditions that precede major turns. I have seen it too many times to count.
Technology is notorious for leading out of market bottoms. We covered this extensively last year. If you look back through history, the pattern is consistent. Tech gets sold the hardest on the way down and leads the hardest on the way back up.
The turn never feels comfortable. It shows up when fear is still elevated and most people are waiting for confirmation that arrives too late.
Most traders are parked in cash or positioned defensively right now. When the rotation fully flips back toward growth, the underinvested crowd will be forced to chase. That creates a feedback loop that accelerates the move higher.
I am not calling this the bottom. I am saying the ingredients are forming right in front of us. The signal I have been waiting for has arrived. Now I need to see follow-through.
Positions matter more than opinions. I have mine on. Be ready for anything. You may be pleasantly surprised.
Stay tuned,
Gianni Di Poce
