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Rotation into Defensives

'2026-07-17'
Now Playing Rotation into Defensives

Cracks Appearing

Our Sector Rotation Model clearly shows, what is going on right now in the marktes: sector_strenght

Sector Strenght vs SPY

The former driver of the extreme bullish rally is now the biggest loser: Technology. Or to be more precise Semiconductors.
semiconductors Interrestingly, the market itself is broadening, i.e. money is still flowing into stocks, but into other sectors. The Market Breadth tracks exactly this behaviour. currently the market is broadening, moving away from being concentrated in Semiconductors or the Magnificent 7 away to other stocks. This is clearly observable in our Market Breadth Analysis tracks preciselywhich sector is winning and which sevtor is losing: breadth, where we can determine 4 key Market sectors, where Smart Money is currently Accumulating: Energy Utilities Healthcare Real Estate

These sectors are all Defensives, thus issuing a RISK OFF signal to all Investors and Traders. The Upcoming Months could be weak in terms of gains and performance. The 4 year presidential Seasonality underlines this further, as we enter the weakest period until the Mid-Term elections in October.

seasonal

Yesterday’s Sell-Off was accompanied by an exceptional ETF Flow pattern. Typically Inflows into Tech stocks dominate by orders of magnitude all other sectors. However, yesterday we saw massive Inflows into Healthcare, Real Estate, Stables and Energy. etf_flow

ETF Flows - Sector Analysis

Following teh inflows, a series of statistically good trading patterns have emerged in exactly these Sectors:/

pattern_statistical_outlook

Statistical Sector Outlook, based on the current pattern distribution

Our Stock screener is great to filter Bullish patterns in these exact Sectors stock_heatmap

Stock Screaner- Bullish Pattern Heatmap

Abbvie is a good example: abbv_stock

Analysis Chart of ABBV

After a long sideways consolidation since 2005, over the course of the last months ABBV has formd a Cup with Handle - Formation, and yesterday, with a massive green candle, resumed it’s uptrend. This breakout was preceeded by a massive Volume spike, wich was caused by a confiremd Darkpool trade on June 6 and followed by a series of Call-Option Inflow days. Earnings will take place on July 31.

This is in strong contrast with the general Market outlook, pointing towards further possible pullbacks, as determined by the Markov Regime Analysis markov

Markov Model for the S&P 500

It is advised to stay cautious and to reduce risk over the coming days and weeks. Current opportunities are found mainly in signle stocks and defensive sectors.