April 20, 2025
Introduction
As we navigate these volatile markets, understanding sector rotations and macroeconomic trends is critical. One of the most effective tools for doing so is tracking industry-specific ETFs, which provide real-time insights into shifting investor sentiment and economic cycles.
Recap of Recent Market Turmoil
- Recently, financial markets have been on shaky ground even before the tariff-related geopolitical escalation.
- The real catalyst came on April 2, when the new tariff policy was unveiled. The reaction was worse than anticipated—technical support levels were shattered across multiple industries.
- Key takeaway: Old support has now become new resistance, and until we see true capitulation (particularly in the Magnificent 7, Tech, and Consumer Discretionary sectors), we should expect sell-offs to resume in waves, even amid short-term rallies.
The “Party’s Over” Signal: Gold Miners as a Leading Indicator
In long-term bull-bear cycles, Goldminer stocks often peak last before joining broader downturns. Why does this matter?
- Gold’s Inverse Relationship with the Dollar
- At gold’s peak, the USD is typically at a cycle low.
- Wall Street insiders use gold as a late-stage hedge, then pivot capital elsewhere once the cycle turns.
- The Shift to Risk-On
- When gold’s bull cycle ends, interest rates rise, safe havens weaken, and money flows into equities.
- The financial sector typically leads the next bull cycle, benefiting from higher rates and increased loan demand, followed by industrials as commodity costs decline.
The Economy as a Living System
Think of the economy like the human body:
- Money = Oxygen – Demand dictates price (interest rates).
- Central Banks = Doctors – They regulate the system with policy tools.
- ETFs = Diagnostic Tools – They show which “organs” (sectors) are thriving or failing.
Why Industry-Specific ETFs Matter
By monitoring ETFs tracking:
- Commodities (e.g., gold, oil)
- Financials (early-cycle leaders)
- Tech/Consumer Discretionary (late-cycle momentum)
- Industrials (confirmation of expansion)
…we gain a real-time pulse on:
- Sector rotations
- Macro trends (USD strength, rate expectations)
- Capitulation points (when selling exhausts itself).
Key Takeaway
In uncertain markets, don’t just watch the S&P 500—track industry ETFs to anticipate turns, spot opportunities, and manage risk. The next bull cycle will be led by those who see the shifts first.