The market opened the week at what initially served as the pivot highs back when markets were crashing in March. However, from the April low to the start of last week, the market rallied nearly 24% in just 30 days. I’m still in disbelief at this rally, yet most seemed fixated on the mere 2% drop the market experienced this week.
As the market began to digest the tariff plans, Trump reignited tensions last week with a renewed focus on the EU and the iPhone, coupled with a credit rating downgrade from the bucket shop, Moody’s. Since this wasn’t the first downgrade the U.S. has seen, it wasn’t nearly as shocking. Repeated fears tend to lose their impact after the first time the market hears about them. Even with tariffs in play, the market barely flinched. We saw three fairly significant events, and all the market did was calmly pull back 2%.
Looking ahead, most eyes will be on NVDA’s earnings this Wednesday.
With the VIX returning to its normal range, it feels like we’re finally back in a safer environment for swing trading compared to March and April.
Sector-wise, Utilities appear to be the only group showing real relative strength right now.
Meanwhile, other sectors — Industrials, Financials, Tech, and Semis — much like the broader market, seem due for further pullbacks before they can properly set up for their next leg higher.
On the avoid list: REITs. They continue to roll over after their bounce. Pair that with a 30-year mortgage chart that looks like the best bull flag out there, and it’s clear we should steer clear of this space.
Healthcare and Biotech have also remained weak, along with Materials — all still stuck in their respective breakdown stages, while many of their peers have already moved on.
Recently, I have been reviewing trades with several members. In my experience, when someone reaches out for a trade review, it’s usually because they’re off their game and looking to improve. A few common patterns have stood out:
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Trying new strategies they're unfamiliar with. Stick with the setups that work. The boring bull flag consistently pays. Chasing some fancy intraday setup someone else pulled off once? That usually ends up costing more.
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Overtrading. Now that volatility has cooled, there will be more setups — but that doesn’t mean trade everything. Be selective. Come into the week with a few solid ideas and 1–2 A+ setups. One A+ setup is far better than ten mediocre ones.
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Breaking simple rules. Nine times out of ten, losses came from cheap names (under $30/share), setups on smaller timeframes (intraday), and poor planning.
The market handed us three years’ worth of gains in just 30 days. As we begin to see some digestion from that run-up, be patient. Focus on your top ideas. Post your charts and a complete game plan in the chat. As tempting as it is to reinvent the wheel, sometimes the wheel is working just fine — we just need to remember to stick with the simple rules that got us here in the first place.
Macro Rotation Outlook
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