🔎 Building the Base

We’re seeing healthy sector rotation play out, with risk-on groups like Communications, Technology, Industrials, Financials, and Discretionary all flashing green.

This builds on what we’ve been highlighting in these notes for a while now.

The bears had their shot — and they blew it. Failed breakdowns are rippling through the market, and what we’re seeing now is the aftermath: buyers stepping in, and the tape responding.

With markets back on solid footing, the question becomes: is this just the beginning of something bigger, or are we in for more sideways chop?

Zooming out, the Communications sector — a clear leader — might offer some insight.

Since the bear market lows, $XLC has delivered an exceptional run with barely any volatility. But that changed on Liberation Day — marking the first real correction this group has seen throughout the entire bull phase.

Looking at the chart, it wouldn’t be surprising to see some sideways movement here — maybe a base-building phase before the next leg higher.

In trading, managing risk is non-negotiable — but equally important is managing expectations. Not every move is the start of a breakout. Sometimes, the market just needs to breathe.