Before I get started, I want to say thank you to all of you who joined me for ChartMania Live! It was a great success.

I gave my take on roughly 100 stocks—including Nvidia (NVDA), Joby Aviation (JOBY), Palantir Technologies (PLTR), and IONQ (IONQ). I also shared the top two sectors to focus on over the next few years.

If you missed it, watch the replay here.

Today, we need to discuss the rotation that’s underway.

It’s not the sort of rotation traders are used to.

Usually, after an explosive tech run (like we’re having), money spreads out. It rotates into other “risk on” groups. 

Think consumer discretionary stocks, financials, and industrials. 

That’s not happening… at least not yet.

The Financial ETF (XLF) is currently sitting 8% below the all-time highs it set in January. 

The Industrials ETF (XLI) is 4% below its record highs. And the Consumer Discretionary ETF (XLY) is still down 7% since January. 

Not even the Communications ETF (XLC) has set new highs during the recent rally.

This rally has been all tech. 

The Technology ETF (XLK) is currently 14% over its October highs, after surging 42% since late March.

So, where’s the money flowing now?

Energy.

The Energy ETF (XLE) is up 9% over the past week or so. 

XLE hasn’t broken out yet. But that’s likely only a matter of time. As you can see below, XLE has spent the past several weeks basing after its red-hot start to the year. 

The Oil & Gas Exploration & Production ETF (XOP) is also looking constructive. Like XLE, it’s building out a multi-week base above its rising 21-week moving average.

The Oil Services ETF (OIH) is even stronger, breaking out to a multi-year high yesterday. Last week, it broke out to new seven-year highs. 

At the same time, there are countless individual energy names that have either broken out or are on the verge of big upside moves. 

You can also see that oil remains in a strong uptrend… despite the recent headlines regarding a de-escalation of the conflict in the Middle East. 

When you add up all the evidence, energy stocks appear on the verge of another major leg higher.

During ChartMania Live, I looked at specific energy names and how I’d trade them. Go here to watch the replay.

Justin Spittler

Chief Trader, RiskHedge