Photo by Steve Johnson on Unsplash

I want to walk you through the concept of “spinning the staff,” a visual I like to use when talking about market channels and sector rotation. Think of a martial artist spinning a long wooden staff: the energy isn’t just at the ends—it’s in the rotation, the center, the rhythm. That same dynamic applies to the market right now.

We’re watching tech (XLK) surge, lifted by a handful of heavyweights riding the AI wave. Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), Broadcom (AVGO)—you name it. These are the ones spinning the staff right now. But here’s the key: when one end is rising, another might be dipping. Communications (XLC) is breaking support, while tech stretches toward the upper end of its channel. 

When sectors that are normally correlated start to diverge, it’s a signal, and not one to ignore…

What we’re trying to do with these channels is define efficient price behavior. I’m not looking at daily noise. I don’t care about today’s candle unless it’s at the top of a well-established trend. What I’m looking for are touches—three, four, five points of contact on a line that tells me buyers and sellers agree, whether they admit it or not. And when that efficient pace is broken, we either accelerate—or we stall. And stalls at the top of channels are usually warning signs.

Volume tells the rest of the story. If price is reaching new highs but volume is thinning out, that’s not strength—it’s exhaustion. We’re seeing that right now in XLK. We hit resistance, and volume is fading. Same with AMD. We had the volume—150% of average—and still couldn’t break through. That’s a full sprint into a locked door. You can only do that so many times before the market sits down to catch its breath.

Meanwhile, utilities (XLU) and nuclear-related names like NLR are flat. That’s not what you want to see if you believe AI is going to power the future. AI demands energy—tons of it. But the supporting sectors aren’t showing signs of that surge in demand yet. That disconnect tells me this rally isn’t being fueled by fundamentals. It’s speculation. We're buying the sizzle, not the steak.

So what do we do? We don’t chase highs. We wait for price to come back to us—back into the channel, back into efficient levels. And when we see strong volume at those inflection points, then we strike. Until then, we protect profit, tighten stops, and let the market spin the staff. That’s how we stay disciplined, and that’s how we stay in control.

Because if you're going to play this game, you'd better know which way the staff is turning.

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