Markets continue to reflect an early-stage, broadening bull market, driven by expanding participation rather than narrow leadership. Headline indices such as the S&P 500 and NASDAQ 100 remain constructive, but equal-weight measures outperform, signaling that the average stock is doing better than the largest names. Market breadth expands across global equities, correlations fall, and capital spreads more evenly across regions as non-US markets strengthen. This environment reflects a healthy sorting market where selectivity matters more than passive index exposure.
Leadership rotates beneath the surface. Financials, industrials, materials, and commodity-linked equities show expanding breadth, while rate-sensitive defensives and parts of technology lag. Energy, represented by the XEG, begins to emerge from a long consolidation as leading stocks break to new highs. Commodities and precious metals remain structurally supported despite short-term extensions, reinforcing a positioning framework focused on areas of widening participation and durable trends rather than headline index weightings.
Key Takeaways This Week:
1. The Bull Market Is Broadening, Not Peaking
Market action continues to support the view that we continue in a bull market although leadership is increasingly rotating away from tech.Breadth is expanding across geographic regions and sectors, with more stocks participating in uptrends. Correlations are falling, which is a healthy sign and suggests this is a stock picker’s market rather than a macro-driven one.
2. Leadership Is Rotating Beneath the Surface
While headline indices remain constructive, leadership is quietly rotating away from narrow, mega-cap tech toward financials, industrials, materials, and commodities. Equal-weight indices are outperforming cap-weighted ones, reinforcing the idea that the average stock is doing better than the largest names.
3. Energy May Be in the Early Stages of a Catch-Up Trade
Energy has lagged for years following a long bear market and extended consolidation. Recent price action, improving technical signals, and strong performance from leading names suggest the sector may be starting to participate. With energy still a very small weight in major indices, even modest reallocation could matter.
4. Commodities and Precious Metals Remain Structurally Supported
Despite short-term overbought conditions, the longer-term setup for commodities remains constructive. Central bank buying, underinvestment over the past decade, and improving relative strength versus equities point to an ongoing structural bull market. Corrections are possible, but the broader trend remains intact.
5. Global Equity Opportunities Continue to Expand
Non-US markets are outperforming and showing improving breadth. Japan, parts of Europe, and select emerging markets are benefiting from better earnings revisions, more attractive valuations, and improved corporate behavior. Capital is beginning to flow more evenly around the globe after years of US concentration.
6. Portfolio Positioning Favors Areas of Expanding Breadth
The focus remains on owning sectors where participation is widening and avoiding areas with deteriorating breadth. Financials, industrials, materials, and select technology exposures continue to offer opportunity, while traditional defensives and rate-sensitive areas remain less compelling. This remains a time to be invested, but selective.