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Energy Energized: The XLE on a YTD basis is higher by more than 40% thus far and would be shocking if it was caught by year-end. This would be a very rare example of the sector being the best of 11 in back-to-back years as the fund rose more than 50% in 2021. Remember trends once in place are more likely to remain than to reverse. Of course, this group suffered a 29.8% drawdown top to the bottom of the range between weeks ending 6/3-7/15 but the space looks to be on the mend. In a very basic sense IF we are already coming out of a recession the PRICE of crude should have tailwinds going forward. From a PRICE perspective, the XLE is now back above its 50-day SMA for the first time in 2 months as it looks to build the right side of a cup base that found comfort at its rising 200-day SMA. On the charts below one can see how historically the sector comprises an average of 10% of the S&P 500 and still remains half of that presently. On the ratio chart, it looks like some mean reversion is already underway.

Tech Rebound: Things tend to look best at the top and gloomiest at the bottom. While nothing is sure, the Nasdaq completed a very strong MONTHLY candle Friday, and notice on the chart below the last 2 times that happened in January 2019 the tech-heavy index rallied for 3 consecutive months and 10 of the next 12 months. And even more impressive following the April 2020 precedent it advanced 15 of the next 19 months. The similarities exist as the month of January 2019 jumped 11.9%, the month of April 2020 screamed higher by 19.2%, and July powered ahead by 12.6% (in the last decade there have been four total double-digit MONTHLY Nasdaq advances). Notice as well during each of these months volume was not robust, as at the start of rebounds belief is at a minimum. With the mega caps earnings now in the rearview mirror after last week, one may ask what the catalyst now is. There does not have to be one, but perhaps the market is looking months forward as it normally does to the mid-term elections in November.

Growth In Vogue: On a day when technology acted well with the XLK up 1.4%, it was "only" the seventh best major S&P sector performer. Both the XLU and XLRE shined Thursday with advances of more than 3%. And tech was aided by an uncommon source via the renewable energy equipment space. The TAN ETF rose 7% Thursday and that was on top of the 6% advance on Wednesday. For the week with one session left the fund is up by 14%. On its WEEKLY chart, it broke through resistance at the round 80 number and now looks poised to travel toward the very round par number into the latter half of 2022 which would be a double bottom base with a pivot of 101.68. But do not sleep on the semis and software as the SMH is likely to extend its winning streak to 4 up almost 4% heading into Friday. The IGV is higher by nearly 2% as it approaches the round 300 number which has been both support and resistance in 2022 thus far. Of course, AAPL will have a big say in how the week ends tomorrow and it CLOSED just 1% from its 200-day SMA. Put your seat belts on for tomorrow. AMZN ROKU KLAC and INTC round out the festivities.

Most Breakouts Are Retested To Determine Their Validity: My belief is that going forward into the short term, perhaps until the end of summer, the bullish narrative flows through technology. The nascent growth outperforming value needs to persist here. Friday most likely caught many bulls offside but on the chart below of the QQQ one can see a line being drawn in the sand with an impending retest of the bullish ascending triangle just below the very round 300 number. Round number theory is coming into play a lot here overall with the Nasdaq trading roughly between the very round 11000-12000 figures in July (S&P 500 playing footsies with the 4000 figure and the SOXX being rejected at the 400 level Thursday). Nothing goes up in a straight line, but give the Nasdaq credit for still making higher lows since mid-June. The whole sanguine tech thesis will be put to the test next week as 4 of the top 7 holdings REPORT earnings next week including AAPL GOOGL MSFT META and AMZN.

Tech Comeback? Any chance of a market rebound will need to include technology. As I have been saying for a few weeks now some green shoots are starting. And remember only liars pick bottoms, but some evidence is mounting of a comeback. The Nasdaq is now lower for 12 of the last 15 weeks, so it is still in a firm downtrend that must be respected, but some individual names are offering decent risk/reward with tight stops. AAPL is now back to the 150 number and added more than 2% this week as the Nasdaq slipped 1.6%. It did record a spinning top Friday which suggests it may need some back and filling. MSFT and GOOGL recorded dubious candles however as they were rejected at their 50-day SMAs. Other top holdings in the QQQ like TSLA and AMZN did the same thing. But the ETF did CLOSE at the top of its daily range with NVDA and AVGO helping as the SMH rose almost 3% last week. We are back to familiar resistance as it CLOSED last Friday, and the Friday before right at its 50-day SMA, of course, this time however was a lower high. There is still plenty of work to do but the longer-term WEEKLY chart shows if this 200-day SMA can continue to hold we may look back on this later in the year regretfully for those that did not take advantage.