If you look at the big picture, the S&P 500 was able to punch out back-to-back weekly gains after slumping for the prior four weeks. Now it has almost clawed its way all the way back to the February highs.
But as the saying goes, "Houston, we have a problem." And that problem is tech. Bull markets need technology to rally like a hot rod needs gas, and without it, typically, you're going nowhere.
If you look at the 10 sectors in the S&P 500, all but tech rallied this week. If you drill down into the 24 industry groups, you'll see that software and services actually held up and that all the lagging fell squarely on the shoulders of the semiconductor and semi equipment and computer hardware groups. Not good. Only two of 24 groups declined this week, and it was two of the most widely loved. Nary a strategist we've spoken to can say anything bad about tech.
And making matters worse, by week's end a clear shift into defensives had emerged, with telecoms, utilities and health care all beating the market. All of this will raise the stakes for next week, when we'll see if the market can rally on to a new high or return to its corrective phase and another cycle of "let's trade the ranges."
One thing I know for sure is that the Breakout Boys will be all over it again next week and looking forward to having you on board with us again.
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