Big Picture - History Lesson

Last week we saw some weakness from the index's but it was hard for us to see as it seemed that any name on our radar was breaking out and never looking back. As the S&P is starting to show us a calm stage 4 breakdown stage. We got the confirmed lower highs a few weeks ago. While on Friday we got the confirmed newer lower low. 

After the rally this market has been on, this slow and steady pull back is one that should be welcomed. This tends to be a time when its hard to find set ups or follow through in set ups. But that was hard for us to find this week and something to be thankful for that our ideas were working out nicely. Of the idea's mentioned last week, we had CBRL, MOH and FND all up 10% or more, while BIIB, TXRH and WST were up 6-8%. As most of those break outs occurred later in the week as the overall index was dropping 20 points. 

Now it's hard to say it was dumb luck that more then half a dozen of our ideas were breaking out while the market was breaking down. These wins came from us staying on top of where money has been rotating instead of wasting too much time on SPCX, which we will get to in a moment. 

So let's rewind to the start of the year, Gold was the darling, as it went on a 60% rally in a 6 month run. It's hard to remember the photo's of people lining up to buy gold at the top but as always dumb money piles in at the end of the move. 

Since the top, Gold has lost some luster as it has since dropped by 28%. Now after Gold topped out at the start of 2026, the rally in Energy started almost to the day. 

Gold topped in early January as money went right into the Energy sector and over the next 3 months, the Energy sector went on a vertical run climbing 50%. When Energy topped out in at the start of April and has since faded a mere 15%. 

The next rally started again almost to the day. As April kicked off, Semi's which were already near highs after a crazy few years. Geared up for a generational run as they increased by an eye watering 60% in two months. 

So, we had Gold rally 60% into the start of 2026, then Energy took over and rallied 50% before Semi's took the torch and ran 60% in 2 months. We've seen Gold fade, while Energy has slowly followed suit, and its too early to see the fade in Semi's coming as people are still getting googly eye'd over the vertical climbs those names have gone on. When semis fade back to earth, the trillion dollar question remains, which sector takes?

Now as we ponder that, lets talk about SPCX for a moment.

We caught a fun few day swing in it, but since as it's done what most new issues do, is lose value. When any stock hovers near lows and you can wait and buy the exact low you wish to buy, the stock is going lower. When a stock tests support for seconds and is back ripping higher are the low's where buyers are really there. When the stock just hangs out and you can wait to buy $150, its going to $140 and lower with time. It may be hard to remember FIG because it was not even close in the hype SPCX had. 

But FIG had a 2 day pop and also spent some time near the stabilizing bid before dying a slow death. If we looked at 100 new issues, 95 of them would look like this chart a year out and SPCX seems to be in that same majority. Sorry, this time is not different. 

As we circle back to who takes the torch from Semi's, it could be another combo such as Healthcare and Bio's, As Bio Tech's have just started to breakout from a 4 year level. 

As both Healthcare and Bio's have been strong recently with very strong and undervalued macro charts compared to the current leaders. If not there is a case to be made for Consumer Discretionary chart wise. 

But I just can't see the story that US consumers are going to start buying things that don't need compared to how we were during the boom in 2020. My money is still on the Bio's and Healthcare but time will tell. 

For now, as always, we just have to keep scanning and taking the tight risk trades as they present themselves and they surely were presenting last week. 

                                                                            

From Bennett

Macro Rotation Outlook

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