Bull market - tech is ready!

 

There are a couple of things on this chart that stand out to me, so let’s go through them.

First, the economic cycle is always behind compared to the stock market cycle, so as we’re talking about starting a recession or maybe being in the middle of one, that means we’re in the late bear / early bull part of the stock market cycle.  If that is true, that means we should see the Financial sector doing well right now, so let’s take a look.

Here’s a chart of the SPRD Trust Financial ETF (XLF).  Since October we’ve been in an uptrend.

In an early bull market stock cycle, we’d expect to see Transportation on the rise.  That too has been on the rise since October.  Here’s a chart of the Dow Jones Transportation Average (DJT):



The next phase of the bull stock market involves technology and you might be thinking that’s where this whole theory breaks apart.  After all, there have been countless stories about tech firms losing employees, but as I mentioned yesterday, most of that was due to over-hiring during the pandemic and now growth has returned to normal levels.

Let’s pull up a three-month chart of the SPDR Trust Technology ETF (XLK).  Sure, it’s not the best-looking chart, but if that’s all you had access to, wouldn’t you say technology is in an uptrend?  We are clearly moving from the lower left to the upper right of the chart.

I’ve been bearish on the market for months and I’ve certainly been slow to jump on the recent rally, but I can start to see the sector rotation and why the bulls are excited.