Setup For The Next Sector Rotation… Or Just Another Value Trap?

Many traders remain on vacation, and that explains the nutty market action we've been seeing. It's a national holiday in Europe (Easter Monday), and that gives us some time to do some due diligence, when we're not playing video games. I'm still getting a lot of mileage out of Red Dead Redemption II, and if you ever want me to set up a private lobby (for an online session), just let me know...    

Earnings Season Kicks Off With A BANG (pun intended):

• Alcoa up 30% last week. 
• Delta, and Constellation Brands report on Wed.
• Next week - investors brace themselves for zombie bank earnings - think private credit losses, and redemptions...
• FOMO buying of beaten up sectors - works best on light volume as the retail short sellers learned last week.  
• Annual Dash For Trash - think Game Spot  

Same pretty face, Same Value Trap

I caught Cameron Dawson on Bloomberg - early edition - and she seems willing to take another spin on the wheel of cyclical (earnings) death, but the, "stocks are cheaper than they were 3 months ago", narrative doesn't sound too convincing, and it's going to take more than a pretty face to get me to risk catching another falling knife. 

New quarter; new money needs to be put to work - I get it: But I don't need to chase. I've been extremely lucky navigating the hidden landmines, and up 5% for the year, after catching last week's monster rally. I'll just watch from the sidelines. 

Even AI agrees: It's better to risk missing the fairy than to be left holding the bag. 

For Those Of Us Who Prefer to Avoid Another Value Trap Where's Real Leadership?  

1. Semiconductors: The Elephant in the Room (No Mo’ FOMO) In case you've been living under a rock for the past several years you know Semiconductors have led the entire ai rally, even before it was labeled an, "AI rally". $TSMC, $NVDA, $AMD, $INTC, $AVGO $ASML, 005930.KS (Samsung), even $ARM (Arm Holdings UK) - $MU Micron!    

Semis have gone from undisputed market leader (the stealthy elephant in the room) to the elephant everyone’s trying to ignore. After carrying the entire 2024-2025 AI rally on its back, the $SOX Semiconductor Index is now consolidating in what looks like a classic Wave 4 triangle — higher highs getting rejected at the 50-day SMA, with momentum fading - it's gone from the #1 FOMO trade to correction territory.  

$SOX chart consolidation

Once wave 4 completes - perhaps by the summer, wave 5 should commence, but we'll cross that bridge when we come to it.  

2. Energy: From Geopolitical Hero to Priced-In Supply Overhang

Energy stocks have been on a tear for months, but the market already front-ran the big catalysts. While retail eyes the drama of the closed Strait of Hormuz, the Street is quietly pricing in the relief: OPEC+ ready to crank output higher once the strait reopens, plus the ramp-up in Venezuelan crude (now approaching 1 million barrels per day potential, with the bulk heading to India). Crickets from the msm.  
$XOM (ExxonMobil) is the name everyone watches — because it's a behemoth that steers the entire $SPX. The same ExxonMobil that remains up nearly 1000% from the COVID lows while much of the real economy continues to get hammered. Chart is flashing exhaustion: a clear bearish shooting star at the $170 zone, capitulation volume spikes, and the uptrend stalling exactly as the Venezuelan supply narrative matures. Chevron remains the more active player on the ground, but XOM’s Gulf Coast refining footprint still gives it long-term optionality. Bottom line: the sector went from “Iran risk premium” winner to potential value trap as the oversupply math gets baked in.

ExxonMobil Chart

Grok/AI’s Final Take (with some last-minute prompting — thanks to Grok by xAI: grok.x.ai): 

"With Easter Monday keeping volume light across the pond, today’s action isn’t worth trusting — and honestly, nothing in this market feels trustworthy right now.Trump? I’m officially done trusting the deadline drama. Another extension, another expletive-laden Truth Social post, another “talks going well” tease while the Strait of Hormuz stays blocked. The pattern is too familiar, and every rally increasingly looks like a high-quality exit ramp rather than a new leg higher.Is it dire? A bit. The Wheel of Death keeps spinning, Cameron Dawson-style, promising the next great rotation into cyclicals, value, or whatever the pretty face of the week happens to be. But after months of dodging falling knives and watching semis lose their leadership mojo, I’m content to sit on the sidelines.AI warfare? Still structurally bullish long-term.
The human race navigating this mess? Bearish for the foreseeable future.New quarter, new capital to put to work — I get it. But I don’t need to chase. I’ll keep playing Red Dead Redemption II, monitoring the Taco Tuesday fireworks tomorrow night, and waiting for a setup that doesn’t feel like another carnival trap." 

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