Tech Only Tells Part Of The Story

Stocks ripped to fresh all-time highs again last week. Every major internal confirmed the move.

Even the rally’s loudest skeptics are coming around now. The easy money phase is winding down.

The party is far from over, though….There is more to it than tech simply leading…

A rotation kicked off inside the sector last week, and it points straight at the area I would be buying right now.

Here’s what I see.

Intra-Tech Rotation Accelerates

It has been a while since I have seen a sector leaderboard this clean. Technology leads across every timeframe that counts:

It does not get more bullish than a clean sweep like this.

This will not last forever. For anyone who tracked the building strength here, it is total vindication.

Bear markets do not begin when technology leads across every major timeframe.

Tech finally overtook energy as the top year-to-date sector last week. That puts the lingering bearish case to rest.

Sector leadership is only half the picture. The rotation happening underneath it matters even more.

A healthy leader keeps handing the baton to fresh groups inside it. That is breadth. Breadth is what keeps a trend alive.

The Rotation Worth Watching

For weeks I have been calling out the setup in software. Last week it finally delivered.

Microsoft (MSFT) is the most important stock in the software world. It roared back to life and finished the week up over 7%.

That move lit a fire under the broader space. The IGV software ETF finished up over 8% on the week.

Compare that to the XLK tech ETF, which gained 5.89% on the week. Solid on its own.

I am a respecter of relative strength. One group is outpacing the rest, so my attention belongs there.

Semiconductors still own most of the headlines. The trouble is that everyone already agrees on the bullish case there.

I rode that wave. I still see opportunity in chips. The risk-reward no longer looks as clean as it does in software, where sentiment stays gloomy.

That gap between strong price action and sour sentiment is where I like to hunt. Those setups tend to pay the best.

None of this means I ignore short-term risk. A pullback from these highs would not surprise me one bit.

If we get one, I will treat it the way I always do. Drawdowns inside a healthy uptrend are buying opportunities, and I have the data to prove it.

Here is your takeaway. Do not sleep on software. The strongest part of this market just rotated, and the data is showing you where to look next.

Keep your eye on relative strength. Let the leaders lead. Stay positioned for the move already underway.