Market Status: Bullish Power (Change Alert)
- Long-Term Trend: Up
- Short-Term Trend: Sideways
- Momentum: Weak
- Price Action: Sideways
When leadership breaks, rotation is underway.
Here’s what I’m seeing: the tape looks healthy on the surface—but the engine under the hood may be changing. The lift you’re seeing now appears to be coming from small caps pressing higher and some of the older, more defensive names inside the Dow. That can be a perfectly normal baton-pass… or it can be the first visible sign of deterioration inside the mega caps—especially across big tech.
And let’s be honest: a lot of speculators already got singed. Many of those mega-cap leaders peaked months ago, and the crowd that chased the last leg up is now learning what “late-cycle leadership fatigue” feels like.
Strong bull markets are pulled higher by their leaders. Weakening, topping markets are propped up by rotation.
That’s the key distinction. Typically, leadership cracks first—usually in tech and growth—then capital rotates into small caps, cyclicals, and secondary sectors. The major indexes can hold up temporarily, giving the illusion that “everything is fine,” even as the broader market begins to soften underneath.
We’ve seen this movie before.
- In 2000, dot-com leadership broke first. The Nasdaq topped in March 2000. Big tech rolled over, and money briefly rotated into small caps and “old economy” stocks—very similar to what we’re watching now. The S&P 500 held up for months… and then it didn’t.
- In 2007, ahead of the financial crisis, rotation masked the stress building in the system. Key leaders weakened earlier—tech and financials cracked first—while money shifted into cyclicals and smaller names. The indexes stayed elevated for a stretch… then fell hard.
Most market tops don’t begin with a panic. They begin with a breakdown in quality leadership—while rotation hides the risk.
Right now, the power that’s been driving this market higher looks like it’s losing momentum. And the fact the indexes are still standing may be because small caps and old-economy names are temporarily holding the line.
That’s exactly why we run a system.
Because our job isn’t to guess the headlines—it’s to read the market’s language early enough to act. And when leadership starts to fail, that’s often the advanced warning to rotate AUM out of harm’s way—into fixed income—so you can wait out the storm instead of taking the full hit.
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Current - Growth Portfolios: Caution - HOLD
Market conditions are stalling. I am holding still until further headwinds are identified.
New Money - Earmarked from Growth: HOLD In Stable & Deploy With Confirmed Signals
As you have new money coming in under management, you might want to consider a strong fixed income portfolio that has little correlation with equities for a 2-4 year time horizon.
Second, you could park assets in short-term fixed income until new opportunities present themselves. When we get a retracement usually is the best time to deploy new assets.
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