This year isn’t 2025. Leadership has shifted, and positioning is more important than ever as we enter the middle of Q1.
The environment is now bifurcated — some areas are holding up, others are struggling.
Nothing necessarily wrong, just different…
Energy and Materials are leading the way, and Consumer Staples are up nearly 15% so far.
Meanwhile, last year’s top performers — Financials, Technology, and Communications — are in the red.
One thing I’ve learned over the years is that seeing Staples near the top of the leaderboard isn’t a sign of a healthy bull market.
And with the S&P 500 pressing into a major resistance level, the rotation beneath the surface starts to matter.
The chart that had my full attention over the weekend was Tech vs. Consumer Staples.
Here we’re comparing the market’s most offensive sector against its most defensive.
They sit at opposite ends of the risk spectrum.
When Technology outperforms Staples, it signals investors are embracing risk.
When Staples outperform, it shows money is rotating toward safety — a hallmark of periods when equities struggle.
Last year, the XLK/XLP ratio completed a massive base and broke out. Now, it’s pulling back into former resistance — a key polarity zone that stretches back to the dot-com bubble.
The key question: will this former resistance turn into support, or could the ratio fail, marking a failed breakout and a red flag for the market?
When you overlay the S&P 500 with this ratio, the two lines move almost in lockstep — making this one of the most important levels to watch in 2026.
How this level resolves could set the tone for the rest of the year.
P.S. Join retail veteran Jeff Macke LIVE Thursday, Feb 19 at 4 PM ET to see which “boring” consumer stocks are set to ride the AI boom — and the 4-box framework he uses to separate the next Domino’s from the next Sears.
