Technology closed Friday at 62.5, up 11.6 points on the week, the single best mover on my board. If you stopped reading there, you would think growth had its week. You would be wrong. Communication Services fell 21.1 points, the worst move on the entire board. Consumer Discretionary fell 18.8, the second worst. Those two sectors normally travel with Technology, same investors, same growth-versus-value framing, often the same names showing up in each other’s largest holdings. This week they went in the exact opposite direction, and by a lot.
The shape of the week
The sector-average support score fell for the third straight week: 57.5, 55.9, 57.2, 51.5, 50.2. That Friday close, 50.2, is the lowest I have recorded in many weeks. Nine of eleven sectors finished the week lower than they started it. Only Technology, Utilities, and a barely-positive Financial Services were in the green.
Sorted by size of move: Communication Services (-21.1), Consumer Discretionary (-18.8), Real Estate (-16.0), Consumer Staples (-14.8), Industrials (-11.2), Materials (-7.5), Healthcare (-5.5), Energy (-5.0), Financial Services (+1.7), Utilities (+5.5), Technology (+11.6).
What was actually behind it
NVIDIA, specifically. Squawk of the week is “NVIDIA earnings fuel technology sector” and “Technology is back,” all thanks to NVIDIA and SoftBank earnings for reigniting AI-related names. That is a real, sourced catalyst, and it is a narrow one. It is an earnings-driven pop in one mega-cap and its immediate semiconductor and software neighbors, not a broad re-rating of growth as a style. The chart above is the clearest evidence I have that the rally never left the starting-line this week. Quick reality check:
Two other things were happening in parallel, and neither one is a technology story. U.S. consumer sentiment weakened as PCE inflation remain above Fed target, a continuation of the softer-consumer thread we touched on in the Discord,
and a genuine data point. Separately, Fed Chair Kevin Warsh delivered his Jackson Hole speech this week with a hawkish tone. Warsh said the economy “appears to have strengthened,” pointed to business capex growing at its fastest pace since 2021, real consumption up over 2 percent, and unemployment at a low, stable 4.1 percent, all of which he called “consistent with full employment.”
On financial conditions specifically, he said credit markets show “few signs of policy restraint” and that he would be “hard pressed to describe broad financial conditions as restrictive.” His stated bar for cutting rates is being confident that underlying inflation is moving to the 2 percent target “clearly and at sufficient speed,” and he said progress on that front has been “modest” even after this summer’s better-than-expected prints. That is a patient, no-rush message. It removes the case for a near-term cut rather than opening the door to one.
A Fed chair removing the case for a near-term cut, rather than opening the door to one, is a straightforward headwind for equities generally, and it explains Real Estate’s second-worst week on the board (down 16.0 points) and Utilities’ merely modest 5.5-point gain without needing a more elaborate story. No green light for a cut, no reason for the rate-sensitive sectors to lead.
Technology’s own price data is not fully on board either
Here is the part that surprised me most. My support score for Technology jumped 11.6 points this week, its best move on the board. The Relative Rotation Graph tells a more cautious story. Technology now sits at roughly 118 on relative strength but only around 90 on relative momentum, which puts it in Weakening territory, a strong long-run trend that is losing steam on a shorter-run basis, not gaining it. That is a real change from a few weeks ago, when Technology’s RRG position was pushing toward Leading. A sector can look stronger in my level-based data the same week its price-based momentum starts to roll over, and that combination, extended on one measure, decelerating on the other, is usually what a mature rally looks like shortly before it either broadens out or gives back ground. I do not know which this is yet.
Friday’s detailed breakdown adds one more layer (if the whisker plot dot-versus-median mechanics here are new to you, the full guide is in this article, worth a bookmark since I will keep linking back to it). Technology’s box is tall, running from roughly 30 to 100, with the mean sitting notably below the median. That is a sector where a handful of clearly weak names are dragging the average down while more than half the names inside it are doing just fine, which is a reasonable, if partial, read on a rally led by one enormous earnings report rather than a uniform re-rating.
Consumer Discretionary and Industrials, the week’s other big losers, show the opposite and more concerning pattern: means sitting above their medians at already-low absolute levels, meaning even their poor headline numbers are being propped up by a few stronger names, and the typical name inside each is worse off than the sector score suggests. Energy and Healthcare both show mean-below-median instead, weak names dragging an otherwise-fine typical name down, which is the friendlier version of a wide box and worth knowing if you were tempted to write either one off purely from this week’s negative headline number.
Friday’s single-day volume breakdown by sector adds a small but useful confirmation. Technology, as is typically the case, drew by far the largest notional volume of any sector that day, more than the next several sectors combined, consistent with real institutional participation behind the week’s best mover rather than a quiet, low-conviction drift higher. Communication Services was second, an unusual amount of volume for a sector that closed near the bottom of the week’s rankings, which suggests Friday’s selling there was a deliberate repositioning rather than the market simply ignoring it. Big volume on both the week’s best and worst movers, on the same day, is a small tell that this week’s split was a real decision playing out across two crowded trades, not noise in either direction.
What’s on deck
Quickly, since it bears on both readings above. Friday brings the next payrolls report, and the prior print was an outright negative -23K against a 45K consensus for the update, a bigger swing factor for next week’s tape than anything in my sector data alone. ISM Manufacturing (Tuesday) and ISM Services (Thursday) will say more about whether the manufacturing strength behind this month’s “accelerating business activity” story is holding up. And the earnings calendar is loaded with software and semiconductor names, Dell Tuesday, Broadcom Wednesday, Zscaler Thursday among others, a real test of whether this week’s rally stays NVIDIA-specific or has room to broaden inside Technology itself, even if it never reaches Discretionary or Communication Services.
What this means, by your clock
If you trade in days to weeks: do not read Technology’s headline number as a green light for growth broadly, the two sectors that usually confirm a real growth rotation just had their worst weeks of the month. What’s on deck above is worth a glance before you size anything into next week.
If you invest in months to years: three straight weeks of a falling sector-average support score, now at the lowest close in some time, is worth taking seriously on its own, independent of which single sector had a good week. Vol compression has the market in a potentially compromising position should headline risk strike. A market that can only find strength in one earnings-driven pocket, while the Fed chair removes the case for near-term relief and consumer sentiment keeps softening, is not obviously a market gaining confidence. It’s not all bad news; there are clear opportunities to keep participating in pockets where the market has demonstrated consistent strength: Commodities, Healthcare, Energy.
Potential traps in Technology, Finance and Industrials may look tempting but are going to have to prove themselves a bit more convincingly. Watch whether Technology’s own RRG momentum keeps decelerating into next week. If it does even as the support score stays elevated, that would be the market’s price action confirming what my level data is hinting at now, a rally running on one name’s earnings rather than genuine broad demand. Subs can track all of this on-demand, day-to-day on the Sector Breakdown dashboard inside the platform. If you're not a subscriber yet, I'd love to have you. And if you've got questions about VolumeLeaders itself, what the data means, how to read the dashboard, anything, just reach out. Happy to answer them directly.
Talk soon, Bruce
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