Every weekend, I review hundreds if not thousands of charts across U.S. indices, global markets, breadth, sentiment, and intermarket relationships.
And now I’m opening up my stalk list.
The names that stood out the most from my review.
This week’s theme: Rotation
August is done and dusted.
The month brought strong returns in stocks and early signs of rotation.
Tech remains the Giant we all follow and hold exposure to.
But performance outside mega-cap tech deserves more of our attention.
Let's get into it.
The Laggard....Tech....
$SPDR Sector Returns In August
August closed with solid gains but the bigger story was sector rotation.
Healthcare, Materials, and Consumer Discretionary led the way, while Tech and Industrials lagged.
It’s early, but strength showing up outside of the usual mega-cap leaders is worth keeping on the radar.
$XLE - Can we trust...the Breadth Thrust?
In August energy quietly flashed strength with 100% of $XLE components moving above their 20-day moving averages.
That’s a short-term breadth thrust in a sector most investors have left for dead.
To me, that sets up an attractive risk/reward. I’m watching for follow-through as Energy peeks above key resistance.
$XLB - Materials
A beautiful reversal is forming in Materials.
Follow-through here could offer a great buying opportunity in a sector that makes up only ~3% of the S&P 500 easy to overlook, but tough to ignore if it breaks higher.
$XLF - Financials Look Frisky
Financials keep grinding higher, and they’ve quietly become the 2nd largest weight in the S&P 500.
If this leadership persists, it suggests any market pullbacks should be viewed with some skepticism.
Strength from the banks is rarely a bearish backdrop.
$GLD - GOLD is Shining
Gold keeps shining… and most investors don’t even own it.
You get zero exposure in the S&P 500, which means you’re probably underweight the one asset that refuses to dull.
$RSP (Stocks) vs. $XLK (Tech Stocks) - It could be Real AND Early.
Equal Weight is trying to turn higher vs. tech. If this rotation is real, it’s still very early.
No need to chase. We’ll have time to continually adjust positioning as the market plays it out.
My Two Cents
The market is flashing early signs of rotation.
What falters at the cap-weighted index level could be opportunity beneath the surface.
As always, the market rewards those who put in the work, study its message, and align accordingly.
