From time to time, I like to play devil's advocate as part of an exercise to identify potential wrenches and better understand the market environment we might be heading into.

One "cheat code" I've picked up over the years is to assess Consumer Staples stocks on a relative basis.

As the ultimate defensive sector, Staples are the safe-haven that investors hide out in when the broader market comes under pressure.

So far this cycle, we haven't seen investors run to these stocks for safety. That said, the ratio is at a critical juncture as we speak.

The chart below highlights Consumer Staples $XLP relative to the S&P 500 $SPY, currently at a major support level marked by the dot-com bubble lows.

While XLP/SPY is testing a logical area where buyers might step in, we have yet to see any reversal activity.

If XLP/SPY starts to catch a bid here, it could signal defensive rotation, and...

Today, while chatting with Sam, we discussed our bullish outlook on Tesla and its potential for more disruptive innovation in the future.

It’s incredible how things once seen as science fiction or “only in the movies,” are becoming reality. 

Elon Musk resembles a real-world Tony Stark or a Star Wars visionary, turning far-out ideas into groundbreaking new technologies.

But this isn’t about Musk or our fundamental outlook on the company — the chart setup couldn’t look any better.

The risk for TSLA is skewed heavily to the upside above those old highs.

Tesla spent the past three years building a massive base within the context of a structural uptrend.

Over the past two months, price has surged in a near-vertical line. Last week, the stock broke out to new all-time...

The Dow Jones Internet Index Fund $FDN has been on a tear, stair-steeping higher in a nearly vertical line for the past three months.

Price is knocking at the door to new all-time highs as it challenges its prior cycle peak from 2021.

However, whether or not this breakout sticks is a big question here.

The lower pane shows that the price is extended from its 200-day moving average.

Every time the price deviated from its long-term average in the recent year, it experienced a corrective wave before continuing its upward path.

So while I’m definitely anticipating some digestion at this resistance zone, I think FDN will eventually get the breakout done and take out this critical level just north of 250.

And when it happens, I want to lean into this leadership group. There is nothing better than a big base resolving into an empty space.

I’m ...

Even though the S&P 500 has experienced a series of negative days, no increase in new lows suggests breadth isn't significantly weakening.

One of the weakest sectors post-election has been the SPDR Materials ETF $XLB, which marked its ninth straight down day today.

The last time we saw such a streak of consecutive losses was during the middle of the previous bear market in 2022. 

What makes this particularly significant now is that it’s occurring right at a key level of former highs.

If the bulls want to maintain control, they’ll need to defend this level of former resistance-turned-support. 

As long as it holds and no new lows emerge, I’ll treat this losing streak as part of a corrective wave. We’re likely nearing a bounce as this pullback comes to an end.

Alfonso

With large-cap tech gaining momentum, semiconductors have set the stage for a year-end rally.

The Equal-Weight Semiconductors ETF $XSD offers a valuable lens into the overall health and performance of this critically important subsector.

Unlike traditional cap-weighted benchmarks, XSD provides a much broader view of what’s going on with these stocks. And right now, it’s telling us everything is good with semis.

Currently, the ETF is testing the upper limits of a big basing pattern, following a prior breakout attempt that failed a few months ago.

Our volatility squeeze indicator is accelerating higher, suggesting a big move is brewing.

If XSD can hold above its prior cycle highs, it can only be a bullish development and a big plus for the broader market.

And if...

December has a magic of its own, doesn't it? Whether it's the holidays, New Year's Eve celebrations, or the irresistible spread of good food, there's something special about this time of year.

It’s a season filled with activity and reflection—and not just in our personal lives.

The stock market also tends to sparkle in December. Historically, this month has been a strong one for equities.

Since 1950, the average cumulative December performance of the S&P 500 paints a picture of steady gains—but the real fireworks usually happen toward the end of the month.

This phenomenon is referred to as the “Santa Claus rally.”

Starting the last five days of the year and extending into the first two days of January, this rally has a reputation for delivering outsized returns.

It's like the market decides to gift investors a little extra trading gains.

Chinese equities have been undergoing meaningful changes beneath the surface since they posted their best week ever back in October.

A new uptrend appears to be taking shape for these stocks.

Looking at the bigger picture, when we compare Chinese stocks to their U.S. counterparts, the relative trend sits at a critical support level.

Take a look at the Shanghai Composite $SSEC versus the S&P 500 $SPX over the last three decades:

This ratio is at a critical inflection point, suggesting a trend reversal and outperformance from Chinese stocks could be on the cusp of beginning.

I can't think of a more logical place for this to happen than here.

Lately, it’s become almost routine to see tech-related groups hitting fresh highs across the board. 

From Software and Internet to Cybersecurity, Digital Payments, and Fintech, the strength in these sub-sectors has been nothing short of remarkable.

Now we can add the Cloud Computing ETF $SKYY to this impressive list of tech indexes breaking out to new all-time highs.

Price just took out a critical resistance level at the prior cycle highs from 2021, surging past 120 without looking back. 

This level now serves as a key threshold to watch on any corrective action. Will former resistance turn into support?

As long as SKYY holds above those old highs, the path of least...

Traveling is one of life's greatest joys—getting to know new places, cultures, and food never gets old.

I've been lucky to visit some incredible spots like the UK, the south of France, Chicago, San Diego, Madrid, Rome and my all-time favorite: New York City. As a 27-year-old Venezuelan, I feel that place is just electric.

But travel isn't just fun—it's also a hot theme in the market right now.

Travel stocks have been some of the biggest winners since the market bottomed this summer, showing how strong the consumer economy is.

These are the kinds of stocks that thrive when the economy and markets are doing well.

The Defiance Hotel, Airline, and Cruise ETF $CRUZ does a great job of illustrating the recent strength in this area.

The ETF has been ripping in a near-vertical line in recent months, breaking out of a massive base to fresh all-time highs.

It’s game time for big tech stocks.

Apple $AAPL, the world’s largest company, has just smashed through its six-month consolidation range with authority, breaking out to new all-time highs. 

The stock is kicking off a fresh up-leg, and I think this puts it firmly on track for a jaw-dropping $5 trillion market cap.

Think about that—It only needs to climb a little under 40% to get there. 

And let’s be real, this stock can do that with ease. It rallied over 40% in a little over two months from the April lows to July highs earlier this year.

Apple is a juggernaut and appears to be reclaiming its leadership role in the tech sector.

The largest and most important stock in the world breaking out to new all-time highs could set the stage for the rest of the mega-cap complex to follow.

Just take a look at Meta Platforms, which is showing...

Participation continues to expand across the board as more sectors and industries break out to new cycle highs.

The SPDR S&P Retail ETF $XRT is the latest example of this theme.

Here’s a look at XRT completing a textbook bearish-to-bullish reversal.

After spending nearly three years in the base-building process, buyers are finally taking control and kicking off a new uptrend.

This is the same bullish pattern we’ve seen so many times in this bull market. We’ve watched these formations take shape and resolve higher one after the next over the past few years. We don’t expect the retail index will be any different from those that came before it. 

The path of least resistance is now higher for XRT.

Retail stocks deserve a spot on our radar, and it’s time to identify the best opportunities in this space.

Alfonso

When I was a kid, I loved to play video games. I spent endless hours on Mario Bros, FIFA, and Call of Duty. Those games were my favorites!

Now, I see them in a whole new light—as an opportunity to profit in the market.

Gaming and eSports are a hot spot right now, and the stocks tied to it are embarking on new uptrends.

A great way to tap into this space is through the VanEck Video Gaming and eSports ETF $ESPO.

After over three years of absolutely no progress, ESPO is finally breaking out to new all-time highs.

Buyers are in full control and as long as we’re above the 2021 highs, gaming is a group that I want to lean on for long exposure.

When I dive into the holdings, I see a lot of great-looking setups that make this space even more attractive.

Let’s hit the charts.

First up is Electronic Arts Inc...