Quiet Bullish Signs Behind Loud Bearish Skepticism

Thoughts on the Market

With earnings season behind us, we now enter ego season — kicked off by last week’s circus between the world’s richest man and its most powerful.

As Trump and Musk try to out-alpha each other, it’s yet another reminder to tune out the noise and stay focused on what really matters: price action.

Charts don’t make stuff up — they show you exactly what’s happening.

And right now, the message of the market continues to be that bull market behavior is being re-built.

But of course, our view is always anchored in the weight of the evidence.

So let’s take a look at what’s driving our bullish view — and what’s still keeping us a little cautious.

Just a week ago, we pointed out the relative strength showing up in Tech stocks, so let’s pick up where we left off.

Since the market stopped moving lower in early April, Tech names have been leading the way higher again.

However, Technology has been in a relative downtrend vs the S&P 500 for much of the past year.

That changed last week thanks to the strong price action that gave Tech an additional boost — just as we anticipated — flashing a strong risk-on signal and adding fuel to this V-shaped rebound.

This breakout in Technology is also happening on an absolute basis.

The sector is hitting fresh 3-month highs, and we’re seeing the most names break out to new 12-week highs since November.

However, under the surface, breadth remains lackluster.

Tech is now more than 6% above its 200-day moving average, but the number of Tech stocks actually trading above their own 200-DMA is still weak — even lower than it was in May, when the sector was trading lower.

So, it’s a strong move, but still a bit top-heavy.

On the bright side, Semiconductors are finally stepping up again.