Distribution, Rotation, Patience
Weekly Outlook 06/29/26
Market Recap
Indices (week): SPY continued to pull back this week and closed under the 50-SMA. The Nasdaq closed lower than the open every day last week, a subtle sign of distribution picking up across the tape. The Dow and Russell held up better as money rotated out of mega-cap tech. By Thursday, 63% of S&P 500 stocks were trading above their 50-day moving average, up from 50% at the start of June, a sign of healthier breadth even as the headline index struggled.
Hyperscalers are now expected to spend $725bn on AI capex in 2026. Investors are shifting focus from revenue growth to returns on invested capital. The result was the Mag 7’s worst week in months, with the market rewarding the chip suppliers and punishing the spenders.
Micron surged on Wednesady after a blowout Q3 beat, with demand for high-bandwidth memory and AI data centre products extremely strong. Guidance also topped forecasts. However, it sold off after the open and traded lower into Friday’s close, a potential sign that all the good news has been discounted in the stocks huge 300% rally since April lows.
OpenAI IPO delay: The New York Times reported OpenAI is leaning toward pushing its IPO to 2027. SpaceX’s post-IPO collapse from $225 to near its listing price of $150 spooked the board. CFO Sarah Friar is pushing for the delay, citing cash burn, compute commitments, and the burden of public reporting.
SpaceX: Trading around $152, near its IPO price, after hitting $225 intraday during its debut week. Down 30% from its post-IPO high. Also acquired AI coding tool Cursor and raised $25bn via a bond sale during the week.
Watchlist
The QQQ 0.00%↑ has been showing many distribution days since the character change early June, overall price remains in a range between the washout low on June 9th and the all time high level. Until this range resolves, it’s hard to have much bias inside a neutral consolidation range.
SOXL 0.00%↑ semis have been suffering from wide volatility, often a mark of turning points. After such a big rally from April it would not be surprising for the sector to pull back more, or go through a lengthy consolidation period.
One chart that personifies this parabolic run is WDC 0.00%↑ which when viewed on a weekly timeframe, looks like a confirmed parabolic top now.
Two semis that still look constructive are MXL 0.00%↑ and INTC 0.00%↑ but it’s questionable whether they can break out with the overall group under pressure.
Despite the weakness in tech, there was a large breadth surge on Friday. Many other sectors in the market are performing surprisingly well. One potential scenario is a rotation out of semis into broader areas of the market.
XLV 0.00%↑ closed at an all time high on Friday.
LLY 0.00%↑ broke out to new highs:
XBI 0.00%↑ the biotech ETF has been performing well after a breakout last week:
ARKG 0.00%↑ the ARK genomic revolution ETF is also a strong subsector within biotech.
CIBR 0.00%↑ cybersecurity is consolidating after a strong leg up - and could be ready to make a move.
PANW 0.00%↑ and FTNT 0.00%↑ look like the leaders in cybersecurity at the moment:
Crypto deserves a mention for being of the weakest assets in the market right now, consistently making new lows. MSTR 0.00%↑ is also under pressure especially as the STRC 0.00%↑ preferred trading well under par is the tell that stress is building beneath the surface.
Closing Thoughts
The leadership is taking a breather. Money is rotating out of the big winning semis and memory names, and the question now is whether the broadening can carry the load while the $QQQ gets dragged around by a group that looks like it has topped for now. The breadth surge on Friday says the rest of the market is willing to step up. Whether it can hold the tape together without the generals is the trade to watch.
There are stocks in uptrends, but the high-momentum tech universe we usually live in is thin on setups right now. If you do not mind slower names and lower volatility, the rotation sectors are where the clean trends are. For tech specifically, the better opportunities may be tactical shorts in the memory names, if the tape continues to show weakness and that they have genuinely topped.
Zooming out and it is simple - the easy money was April and May. Since the June top we have been chopping, and a range-bound, choppy summer would not surprise anyone. It could be a time to size down, stay patient, and give the market time. The easy trends in tech will come back once $QQQ resolves out of this range first, whichever direction it chooses.
If you enjoyed this read, please consider leaving a like on the post, and let me know in the comments if I missed anything or what you’re watching for this week!
P.S.
If you haven’t checked out the Valhalla Portal yet, it’s where I track catalysts, setups, and market activity in real time - a live feed of everything that moves the tape, built for the community. I’ll be doing a dedicated post soon walking through all the features in detail, so stay tuned for that. In the meantime, you can check it out here: