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We have a special guest, Jeffry Turnmire, joining us for today’s action-packed show and more [tap to join us for Opening Playbook]
You know what was interesting about Monday’s market?
Everything went up.
Technology (XLK), Consumer Discretionary (XLY) and Industrials (XLI) all participated to the upside. On the surface, that sounds great — broad participation and the kind of strength that makes you feel like the market is on solid ground.
But here’s the thing most traders miss.
When all sectors move in perfect lockstep like this, it’s not actually showing strength in the traditional sense. It’s showing something much simpler — straight liquidity.
Not sector rotation, not fundamentals, and not some story about AI valuations or PE ratios being too high in certain areas. Just liquidity moving in and out of the market.
Back in December and January, we had real sector rotation. You’d see money flow out of one area and into another, which is healthy because it shows the market working through a process.
But right now it’s just big liquidity moving in and everything going up, or fear pulling liquidity out and everything going down. Period.
Why This Changes Everything
Here’s what I want you to understand.
If anyone’s telling you it’s because of AI valuations or sector-specific PE concerns, it’s nonsense. Right now liquidity is the only factor that matters — the only one — and nothing else is going to move the needle on whether we go up or down from here.
That creates a really unstable situation.
Even though there’s been more optimism around liquidity entering the market than pessimism, the reality is that most potential headlines leaning over this market are probably negative. It doesn’t take much to flip sentiment, and in an environment driven almost entirely by liquidity that matters more than usual.
One quick headline can yank liquidity out just as fast as it came in.
We’ve seen this before — moments where the market looked perfectly aligned to the upside, only for a burst of fear to unwind it all. When fear wins, everything moves down together just like it moved up together because it’s the same mechanism operating in reverse.
That’s why I’m also watching the VIX closely.
It was down Monday, but only around 13%. Normally when the market is having a strong risk-on day you’ll see the VIX fall much harder — 18% or 20% or more.
When it doesn’t, that tells you traders aren’t fully relaxed. There’s still tension underneath the surface, and that tension is tied directly to the possibility of one sharp negative headline shifting liquidity instantly.
This isn’t the first time the market has traded like this.
We saw similar liquidity-driven behavior during the early 2023 rally and again in pockets of 2020 when stimulus and fear fought each other day after day. When liquidity surged everything rose together, and when fear hit everything cracked at once.
We’re in that kind of environment again.
So yes, there is potential for all of these sectors to keep participating if we’re able to keep climbing the ladder. But don’t mistake broad participation for invincibility.
What This Means for Your Trading
When I look at the sector heat map it’s really consistent across the top — every sector participating with outsized moves across Technology (XLK), Consumer Discretionary (XLY) and Industrials (XLI). There’s just a small hodgepodge of names in the red, and even those are very small.
But that uniformity is exactly what tells me we’re not in a fundamentals-driven market right now.
So if you’re trying to pick sectors based on valuations, earnings expectations or rotation patterns, you’re probably overthinking it.
Watch the liquidity, watch how the market reacts to news and pay attention to whether the VIX is confirming or contradicting the move. Until this dynamic changes we’re playing a different game than we were a few months ago.
That’s the edge right now — not being smarter about which sectors to pick, but being smarter about what’s actually driving the bus.
Now don’t forget to join us at 10 a.m. ET weekdays for Opening Playbook, and at 3:30 p.m. ET Closing Playbook!
Nate Tucci
Tucci Trades
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Why I’m skipping Nvidia, Amazon and Tesla
This might sound counterintuitive…
But if I were starting from scratch today with just $10,000 to invest…
I probably wouldn’t buy Tesla for robotics
I wouldn’t choose Amazon for e-commerce
I definitely wouldn’t make Nvidia (NVDA) my main AI bet
Not because those companies are bad. In fact, they’re incredible businesses.
But if you’re starting with a smaller account, the goal usually isn’t stability — it’s growth.
With only $10K to work with, I’d be looking for companies that have a real shot at doubling, maybe even more, over the next 12 months.
And while the robotics, e-commerce and AI sectors are exactly where I’d focus, the names I’d target would be very different from the obvious giants everyone already knows.
Of course, nothing in the market comes with guarantees.
But if I were building a portfolio from the ground up today, the stocks on my list would look nothing like the mainstream picks you hear about on TV.
In fact, I recently revealed this “Buy This … Sell That” watchlist live, including the names and the research behind them.
If you missed the session, the good news is you can still access it completely free today…
