Hello TheoTrader,
The global equity realignment is still ongoing, as the market’s internals here in the U.S. tell us defensiveness is the proper position. But in reality, the selling has been pretty orderly thus far. The meaning behind this runs deep.
For years, U.S.-based traders have been spoiled – all the exciting action was taking place here, after all. I’ve been talking a lot about China recently, and I still think the best opportunity for this year, going forward, is across the Pacific.
But as I’m about to show you domestically, the U.S. market still has problems. It’s trying to heal, but I still need to see more.
Here’s what I mean…
Healthcare Is Big… But There’s a Catch
The healthcare sector, which was one of the worst-performers of 2024, has emerged as the shining star to start the year.
Unfortunately, this is a better sign for bears than it is for bulls. The catch, however, is that healthcare is the second-largest sector in the S&P 500. In other words, it’s important to see the sector do well, but it’s not ideal to see it performing the best.
Over the past month, consumer staples are still running the tape. Seeing communications pop in as the leader in the past year is a welcoming sign, but short-term improvements are still desperately needed for bulls to turn this around.
For that to happen, we should start seeing tech make a rebound first. Unfortunately, it’s not showing any signs of doing so just yet. This means that patience is warranted, and cash is still king in this tape.
I’ll keep you in the loop,
-Gianni
