We're noticing many important cyclical groups beginning to transition to red, indicative of the lingering risk aversion impacting the U.S. markets right now.

The Semiconductor $XSD and Homebuilders ETF $XHB are two perfect examples.

Homebuilders $XHB are potentially forming a longer-term head and shoulders top.

While they sit on a strong level of support and we'd be surprised to see the ETF melt straight through this level, the fact this important group has transitioned to red points to growing cracks in this bull market.

Likewise, Semiconductors $XSD are also selling off very hard right now.

While they remain stuck in the middle of a long-term range, this does point to a weakening of market breadth among important risk-on groups.

In a market environment such as this, being selective remains more important than ever. The industry with perhaps the greatest risk in a looming trade war is the consumer.

JC Parets and retail-expert Jeff Macke went live in a special strategy session to discuss exactly this - the best stocks to buy in the face of a trade war.

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A number of more defensive sectors, like Consumer Staples $XLP, Real Estate $XLRE, and Health Care $XLV are transitioning to green as U.S. markets sell off. This points to the growing risk aversion from investors as money rotates into lower beta and safer equity plays.

We're at a key conjecture between more significant drawdowns in risk groups or buyers stepping in to defend key levels. Last week I pointed to the Consumer Discretionary ETF $XLY retesting its breakout level at the 2021 highs.

Prices continue to work lower in the short-term, and now is when buyers must step in to defend this level.

As evident by the recent dip in this chart, consumer stocks are shifting fast.

There's a lot of headline risk right now with tariffs and trade wars, and there are bound to be significant winners and losers in this space in the coming months.

It's more important than ever to be selective in this group, so that's why retail-expert Jeff Macke is going live at 4pm today (Thursday) where he’ll break down the biggest moves in retail and reveal his model portfolio.

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The big insight here is that equity markets failed to follow through on their strength to close last week.

The Nasdaq 100 ETF $QQQ, for instance, is now breaking below a key level of support. Unless buyers step in right now, there is elevated downside risk in stocks in the short-term.

The key piece of information here is how more and more international diversified ETFs are overtaking the US' S&P 500 $SPY.

International stocks have outperformed YTD versus the United States, a trend that has persistently favored the latter for well over a decade. This has us wondering whether we're entering into a new regime of widening global breadth outside the United States.

Something we're pondering in the short-term, however, is whether we see some rotation back into the United States as many U.S. growth names closed the week bouncing off support while many international ETFs hit their highs.

Take Colombia $GXG, for instance, which is finding resistance at its 2024 highs.

Meanwhile, the Nasdaq 100 $QQQ defended a key level of support.

And while this took place, the relative trend favored the United States over international in a strong way to close last week. Take a look at how much international stocks $VEU underperformed on Friday.

While these are shorter-term trends, the big picture is impossible to ignore.

More international markets are beginning to outperform...

What immediately stands out is how the precious metal miner ETFs have migrated to the top of the table. This points to a pronounced increase in relative strength as equity markets have sold off.

You can see how all these ETFs have transitioned to a darker green in recent weeks.

It's no surprise to see these ETFs outperform the market in periods where gold is also outperforming.

Tracking the ratio of Gold relative to stocks, this ratio tends to exhibit strong upward spikes, followed by prolonged periods of downward of sideways action. Right now, this ratio is experiencing yet another spike as stocks sell off.

Whether or not this trend favoring precious metal stocks is sustainable is yet to be seen, as of yet. But in either case, to top the ETF Power Rankings is no small accomplishment; there is serious relative strength here.

As US stocks have sold off in recent sessions, China growth has migrated to the top of the rankings.

Notably, this group found itself well into the red during the most correction. But this rotation into international stocks is having implications across many key intermarket trends.

The China Technology ETF $CQQQ is on the cusp of completing this massive multi-year base breakout. If a breakout can manifest here, it would be tremendously bullish for this theme.

US sectors have experienced some notable weakness this week as many groups fail to hold their recent breakouts.

While this does a paint a picture that the market environment is transitioning to a choppier period, it is important to view this within the context of the longer-term trends.

Let's take Consumer Discretionary $XLY as an example.

The ETF has just broken to new lows, and the short-term trend has shifted lower.

But when we zoom out, the ETF is actually sitting on top of a significant breakout level. Typically, retests such as these are often met with strong demand.

It's unsurprising to see this weakness early in the year considering the last two years of significant market gains. The third year of bull markets can be more choppy than the preceding two, but longer-term the trends are constructive.

Perhaps the most surprising element of this recent weakness is crypto. While stocks have sold off modestly, crypto is enduring quite a beating. Our Senior Crypto Analyst, Louis Sykes, will be joining Director of Research, Steve Strazza, in an emergency crypto update at midday today.

Growth and large cap factors continue to lead in the green on the US indices table.

Importantly, many indexes have been rejected after testing their most recent highs.

While this isn't a cause for concern, it does suggest that the short-term trend has shifted sideways as many key ETFs are no longer in a period of price discovery.

In these sorts of environments we're always looking for leadership, and that's precisely what retail-expert Jeff Macke is doing. If you want to see his favorite retail stocks, you can get connected by clicking here.

More country ETFs are beginning to climb up the ETF Power Rankings. Beginning 2025, global stocks have actually outperformed the United States.

While this has been a secular downtrend in global relative to the United States, we are entering into a unique market environment of higher interest rates and widening market breadth among differing sectors. While these trends take a long time to reverse, we could be seeing the early stages of a structural reversal in this dynamic.

Just take a look at the ratio of global stocks breaking higher relative to the United States over the last few months.

Do you think this is the beginning of something more serious or will the US begin outperforming once again?

Reach out if you have any thoughts, we'd love to hear them!

Honestly, not much to note here so this will be brief.

The same industry groups continue to lead higher, like Internet $FDN, Cloud $SKYY, Broker Dealers $IAI, and Cyber Security $HACK. Further, the precious metal miners have also transitioned back into leaders.

The same groups are winning. Nothing's changed.

Have a good weekend, folks!

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