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We’re heading into a new week with stocks ripping to the upside following positive developments on the trade front between the U.S. and China.

Over the past few weeks, I’ve pointed out how the market’s internals have dramatically improved, and how we’re seeing leadership from the right sectors coming out of a potential bottom.

This is why I can’t help but laugh when people pretend like, “Nobody ever saw anything coming.”

For those willing to keep an open mind and embrace the nature of market psychology, following relative performance at a sector-based level can be extremely rewarding. 

Let’s take a look at this week’s updates… 

Mess With the Bulls, Get the Horns

One of my favorite things about sector analysis is its simplicity. It doesn’t get easier than to understand that this market lives and dies by technology. It historically behaves as a leading sector, meaning it often bottoms and peaks before the rest of the market.

Take semiconductors, for example. They formed their all-time high back in July 2024, while the S&P 500 went on to make new all-time highs into February 2025.

Although chips bottomed around the same time as the index, it’s been outperforming out of the low. In other words, on a percentage basis, it’s up much more than the S&P. This is the exact type of leadership we look for.

The leaderboard is unchanged from last week, save for financials (XLF) popping into the one-year leadership position. The only thing that’s cautionary on this leaderboard is utilities (XLU) leading on a year-to-date basis. But if this market keeps doing what it’s doing, I expect that to change sooner rather than later.

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