This market can’t stick with a winner.

Every rally seems to be led by a new cast of characters. 

Software runs hot one day. The next day, a different group grabs the baton.

It’s a great market for day traders, but not so much for swing traders. The never-ending rotation has been enough to make your head spin.

But this sort of action is typical of sideways markets. You see, the indices have been stuck in a choppy range for months.

The S&P 500 (SPY) is trading at roughly the same level it was at the start of June. Of course, the market will eventually pick a direction. And that moment could be right around the corner… 

Today was FOMC Day. This is when the Federal Reserve decides whether to cut, hike, or hold interest rates steady.

The Fed decided to hike interest rates, as everyone expected. So far, the market likes what it heard. SPY is up 0.25% on the day, while the Invesco QQQ Trust (QQQ) is up 0.67%.

Now, it’s too early to know whether this is the start of a real breakout. Often, the “true” FOMC move doesn’t arrive until the following session.

But if today’s strength holds, I see one group emerging as the biggest potential winner: artificial intelligence (AI) CapEx stocks.

For the past several months, AI infrastructure stocks have been stuck in a royal chop fest. Take a look. We can see that the VanEck Semiconductor ETF (SMH) has been chopping around since mid-July. 

SMH is currently below its short-term moving average. So, it still has a ton of work to do. But I’m encouraged by what I’m seeing under the hood.

Dell Technologies (DELL) recently broke out to new all-time highs. Hewlett Packard Enterprise Co. (HPE) isn’t far behind. And both Semtech Corp. (SMTC) and Advanced Micro Devices (AMD) look like they could run to all-time highs under the right conditions.

These are the AI CapEx leaders. They could be showing what’s in store for the rest of the semiconductor and AI infrastructure complex. 

Still, I’m not interested in blindly chasing the first FOMC spike. I want to see SPY hold today’s gains, semiconductor participation broaden, and crypto confirm the move.

If that happens, this market could finally shift from endless rotation to a sustained trend. And after months of passing the baton, the biggest opportunity may come when one group finally grabs it and refuses to give it back.

Justin Spittler

Director of Trading, RiskHedge

PS: Initial market reaction on big news days only tells us so much. What matters more is which stocks and sectors show real strength once the dust settles.

These are the moves I look for every week in Express Trader. I sift through hundreds of charts, narrow the market down to the three strongest trades I see, and tell members how to act every Tuesday. You can learn more about becoming a member here.