Nobody Knows Nothing

Mixed signals, unusual leadership and a market that's harder to read

If April and May were easy, June has been anything but.

Despite very little actually breaking outside of inflationary prints - in fact, June has delivered the clearest signs yet of easing tensions between the US and Iran - I find myself increasingly muddled by what the tape is telling us.

The market hasn’t given a decisive signal one way or the other. Instead, it’s been a month of mixed messages, contradictory narratives and volatile price action in both directions. Hardly conducive to the kind of clean swings I like to make when trading.

Risk Composite

My Risk Composite Model supports this view.

Earlier this month, strengthening staples relative to discretionary stocks and a spike in the VIX were enough to push the model into 'caution' territory.

This week, we're seeing another yellow flag, with volatility re-emerging and TLT/SPY reclaiming its 50-day moving average.

None of this screams panic. But it does suggest that left-tail risk is beginning to creep back into the conversation, reinforcing the idea that, while the tape isn't broken, it isn't as clean and straightforward as it was throughout April and May.

Strat Universe & Moving Average Ensemble

The standout feature of this dashboard is the unusual leadership profile.

Despite DXY pushing to fresh multi-month highs and six of the Magnificent 7 trading below their 50-day moving averages, XBI and IWM occupy the top two spots in the rankings.

That’s not the leadership mix you’d typically expect in a risk-off environment.

Meanwhile, SPY and QQQ have lost some short-term momentum, but remain above their medium-term trend measures.

Taken together, this suggests we're not looking at a market that's outright risk-off. Rather, we're witnessing a rotation of capital from former leaders into prior laggards.

The biggest beneficiaries of that shift are highlighted below - a useful starting point when weighing up opportunities heading into Q3.

Relative Performance Analysis

Looking at sectors relative to the broader market can be a useful way to identify where capital is rotating beneath the surface.

While XLK remains the obvious leader, it's often the less-loved sectors quietly outperforming the index that provide the earliest clues about where the next opportunities may emerge - as well as the overall health of the tape.

XLF/SPY

Let’s start with financials. They lead us higher on the way up, and lower on the way down. Which makes today’s level all the more interesting.

If this latest ‘oops’ reversal can hold and the ratio continues to trend higher, I’d view that as one of the clearest signals that the broader market remains in a healthy, risk-on environment. Party on, playboy.

If we breakdown? Well then that’s a different conversation entirely. One that likely takes place over a bowel of microwave ramen, rather than steak tartare.

XLV/SPY

Healthcare has been getting a lot of attention lately, having reclaimed key mid-long term moving averages during the last month as a sector in isolation. And just check where the sector is sitting relative to the broader index.

If healthcare can continue to climb here, I’m looking at LLY to hold its 20dema, NVO to challenge its overhead 200dema and UNH to hold its bullish moving average ensemble.

Can it head lower? You bet. But until we see the tickers mentioned above breaking below their respective moving average ensembles, I see little reason to fade them.

XLE/SPY

Higher oil prices and rising energy costs have been a recurring theme throughout the first half of 2026. Whether that trend continues is anyone’s guess. But if XLE/SPY can continue to hold above its now-rising 200-day EMA, the weight of the evidence would suggest the energy supply shock may not be behind us just yet.

If energy prices make a strong start to H2 2026, the inflationary implications and the FOMC’s stance around rate hikes could act as a headwind for risk assets across the board - so it’s well worth keeping an eye on this one in my opinion.

XLP/SPY

Thankfully, XLP/SPY has our backs when it comes to spotting regime shifts. Below the 200dema, risk assets remain bid and bull markets thrive. Above that level, and things tend to get a little nastier.

Right now, price remains locked in a downtrend below the 200dema. No doy, it’s a bull market until proven otherwise.

A Quick Word on Tech

While semiconductors continue to do the heavy lifting, I’m increasingly of the view that QQQ’s rally off the April lows will struggle to sustain itself unless the rest of the cavalry starts to show up.

Software, communications, and several former mega-cap leaders remain well below their relative highs, leaving the advance looking increasingly narrow.

Long story short, if QQQ is going to push meaningfully higher into Q3, some of the laggards need to pull their weight, and soon.

XLC

If it looks like a top, walks like a top and talks like a top…then it’s probably a top.

Home to the likes of META, NFLX and GOOGL, XLC looks rough right now. If indeed this is a top, keep in mind that the top three communications holdings account for roughly 10% of QQQ. So don’t sleep on its significance as a sector.

Could we stage an ‘oops’ reversal here? Man, that’d be awesome.

But until XLC reclaims some key moving averages - and META and GOOGL do the same - I’m steering well clear of this one.

IGV

As long as IGV continues to retest prior resistance without breaking down, there’s hope for the bulls. Ideally I want to see a close above the AVWAPs shown on the chart before allocating more risk into this area - not before.

Home to MSFT, CRM, NOW, ADBE and PANW, IGV isn't some niche corner of the market. Depending on how you define the group, core software names account for roughly 15–17% of QQQ - so you wanna pay attention here.

Closing Thoughts

If there’s one takeaway from June’s data, it’s that certainty remains in short supply.

The trend is still up. The risk models aren’t flashing red. Yet the leadership profile, sector rotations and mixed signals beneath the surface make this one of the more difficult tapes we’ve seen since the April lows.

Maybe the answer is as simple as waiting and seeing.

But for now, I’ll keep following the data, respecting the tape, and waiting for the next high-conviction opportunity to emerge.

Until then, remember: nobody knows nothing.

Thanks for stopping by.

Best,

Al

Disclaimer: The content provided by Al Trades Charts is for educational and informational purposes only and should not be considered financial advice. I am not a financial adviser, and nothing published here constitutes a recommendation to buy, sell or hold any security. All views expressed are my own and reflect my interpretation of market conditions at the time of writing. Markets can and do change rapidly. Trading and investing involve risk, including the potential loss of capital. Always conduct your own research, consider your financial circumstances, and consult a qualified financial professional before making any investment decisions. Past performance is not indicative of future results.