Good morning,
You’ve heard of “all or nothing” markets, but US equities in 2026 can best be characterized as “either/or”. Either energy is working, or consumer discretionary is. Either healthcare is working, or technology is. But seemingly never both.
We’ve been leaning into the rotation trade and away from the Mag 7 and semiconductors since the beginning of summer, but recently those groups have started to perk up.
Today, we’re going to review just which moves may be for real, and which investors should remain skeptical of.
We’ll cover:
A top-down review using ETFs and key ratios
Technicals for all of the Mag 7
Two of the strongest semis
Semis and key traits to avoid when bottom-fishing the sector
Let’s get into it!
Top-down overview
Recent strength is real but MAGS still isn’t out of the woods
The Mag 7 ETF has outperformed since late June and is pushing up toward its May highs. However, it hasn’t broken out until we see a strong close above $71, and in relative terms this is right where we would expect it to start underperforming again. Bottom line: More work to do.
Recent “growth” strength may be more about large-cap safety
Another caution flag for the growth trade is that the small-cap and “pure” measures have rolled over in favor of value. Only seeing the bounce-back within large-caps could be a sign that recent outperformance is more of a flight to safety in this seasonally weak period.
Not the place to be buying the SOXX
