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Stocks went out near the lows of the week on Friday, and by now, most of you are well aware of my high regard for closing prices. In other words, when stocks close at the lows of the week, it’s a strong signal that bears were the victor of that five-day period.

Over the past month, we’ve seen two downtrodden sectors - energy and healthcare - emerge as leaders. But in the grand scheme of things, not much has changed when it comes to the bull market.

In fact, it’s why I’m calling this pullback the “Bullish Correction…”

A Healthy Rotation If I Ever Saw One

As we finally begin the first full trading week of 2025, there are a couple of new names on our sector leader table. The year-to-date number is especially deceiving here, since we’re only a couple of weeks into the new year.

But I would like to reemphasize the point from last week’s Tale of the Tape: Energy is frequently an outperformer in the late-stages of the market cycle.

Stocks have declined six weeks from their December all-time highs already. Sentiment is generally fearful, although I wouldn’t go as far as to say we’re at levels of market panic.

But what we are seeing is a complete reset of sentiment when it comes to market optimism. This pullback is exactly what was needed to create the conditions for the low of 2025 to be complete - that’s right - by my calculations, the low associated with this move could very well be the low of the year.

All we need is to start seeing the right sectors lead in the coming weeks, and especially out of any imminent low.

More By This Author:

The “Bond Conundrum” Is Driving Markets To The Edge
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I’m Not Worried About This Pullback