A bear market for semiconductors... A bull market for almost everything else... More market rotation... The next big Fed date... Two ways things could go... Both are tailwinds for gold... See the next big move...
The rotation continues...
After a blistering run over the past few months, semiconductor stocks were due for a pullback...
As of Friday's close, semiconductor stocks – as measured by the Philadelphia Semiconductor Index (SOX) – entered a bear market... falling 20% from all-time highs in June.
But here's the thing...
Even with semiconductors as a whole – led by Nvidia (NVDA), Taiwan Semiconductor Manufacturing (TSM), and Broadcom (AVGO) – down 20%, the broader market is still holding up relatively fine.
The benchmark S&P 500 Index is down 2% from a record high set in June, and the equal-weight S&P 500 is down just a fraction from a new all-time high set this month. Over the past month, seven of the S&P 500's major 11 sectors have been positive.
Since June 22, healthcare is up about 7%, financials have gained 5%, real estate is up 4%, consumer staples are up almost 3%, communication services are up 1.5%, and utilities are up 1%. Energy is also up about 8.5%, though that's heavily influenced by renewed hostilities in the war in Iran (which we'll discuss in a moment).
All in all, it's rotation. Money is flowing around the market – to and from different sectors – but not out of it en masse. It's a sign of a healthy market.
In many ways, rotation is the lifeblood of a bull market. We're not seeing "everything is down" days that occur during full-fledged bear markets or panics.
This brings up the question: Where is the money headed next?
Next week's Fed meeting could be a pivot point...
I (Corey McLaughlin) am talking about inflation, interest rates, and what the market may learn about how new Federal Reserve Chair Kevin Warsh will go about central bank business... The Fed meets July 28 and 29 and Warsh speaks next Wednesday.
The last time Warsh spoke a few weeks ago, the U.S. and Iran were reportedly negotiating the 14-point "memorandum of understanding" to end the conflict, and tanker traffic in the Strait of Hormuz was (mostly) moving freely for the first time in months.
Oil prices had plummeted to prewar levels, and official inflation numbers for May were down too. Warsh commented at a conference in Europe, suggesting to me that Fed rate hikes could be off the table.
"Inflation risks have come down," Warsh said on July 1 at the European Central Bank annual forum, as we reported.
Now, the war in Iran is essentially back on. The U.S. has launched 10 straight days of strikes against Iranian targets, and Iran has attacked countries around the Middle East and targeted U.S. military bases in recent days.
Oil prices are up nearly 30% since June (energy stocks have also moved higher, as we mentioned).
But, already, there's talk about reaching another "deal" with Iran that could reverse prices again.
Two possibilities...
Should the U.S. and Iran reach another détente (long-lasting or not) before next week's Fed meeting, it would give Warsh leeway to float the idea of neutral interest-rate policy (at the least), and maybe even the cuts President Donald Trump would prefer down the road.
However, if the market has reason to believe inflation will be "sticky" for longer, expectations for interest rate hikes will persist and maybe even grow from the roughly 50-50 odds the futures market has priced in for a hike at the Fed's September meeting.
All things being equal, a lower interest-rate environment is often a tailwind for growth stocks. But should high(er) inflation persist, and Warsh talks up a big game about fighting higher prices, money could rotate into more "boring" plays like energy, materials, certain commodities, or healthcare.
Take note... and prepare.
Either way, gold could be due for a rebound...
Gold is in its own bear market, down about 25% from the start of the conflict in Iran. In hindsight, it looks very much like a classic "sell the news" event.
But the idea of interest rate cuts or fresh geopolitical uncertainty? As tailwinds go, it's hard to find a better set of possibilities for higher gold prices. Both ideas can benefit gold... and we're going to see one of them.
Either news about the war in Iran gets "better" and inflation expectations drop, or evolving geopolitical uncertainty persists as mid-term elections in the U.S. get closer.
Narratives aside, short- and long-term technical indicators are suggesting a "reversal" ahead for gold, as Ten Stock Trader editor Greg Diamond wrote to subscribers today.
Here's a daily chart of gold that Greg shared, marked up with his analysis including a possible "support" line (in red) around $3,900 per ounce and longer-term trend (black dashed line)...
[Click to enlarge]
There's more circumstantial evidence for a gold bounce back, too...
As Bloomberg pointed out in a recent chart, the amount of outflows from gold (and bitcoin) exchange-traded funds ("ETFs") since March is just about equal to the inflows into semiconductor ETFs. That's probably not a coincidence. Sell the war, buy the AI boom.
A lot of money (around $17 billion) exited the gold trade. That means there's plenty of opportunity for folks to get bullish on the precious metal again, sending prices higher once more, regardless of whether rotation comes from the AI trade or anywhere else.
A tool to help you stay ahead of the next big rotation...
Considering big picture trends... technical analysis... market "rotation"... and big market shifts can help you gain an edge over the market.
This is exactly what the new investing tool from Stansberry Research senior partner and MarketWise CEO, Dr. David "Doc" Eifrig, does. It offers an easy one-click way to evaluate thousands of stocks and sectors to predict where they're headed next.
With this system – which Doc debuted to the public last week – you can get an inside line on what stocks and sectors will be the hottest over the next month, three months, or a year.
As Doc wrote in his free Health & Wealth Bulletin today...
You can see what's in favor... what's out of favor... and what's next to outpace the rest of the market with a simple glance.
You can find the stocks that are bottoming... and those that are topping out after a big run... all with a peek at a chart.
It's a way to look at stocks that you've probably never seen before. And for many folks, it doesn't make any sense... at first.
But it can become one of the most intuitive technical indicators you use.
This system signaled a buy on tech stocks back in early April, before the sector shot up 40% in less than two months. It also identified the sector as a laggard last month.
As another example, this afternoon, I entered SPDR Gold Shares (GLD), the fund that tracks the price of real gold, into Doc's new tool. It showed a simple answer, with a trend of an asset "bottoming," but heading straight for a buy zone.
So gold is not quite a buy yet, but could be soon. Doc's tool indicated this independently of our own thoughts on the potential bull case for gold based on what might happen with interest rates, the Fed, and any other technical indicators.
To learn more and try Doc's tool out for yourself, Stansberry Alliance members and Doc's existing Retirement Trader subscribers can click here. If you want to join them, check out Doc's free presentation that debuted last week (which includes a free stock pick). And make sure to do it soon. The presentation goes offline later this week.
New 52-week highs (as of 7/17/26): AXA (AXAHY), Alpha Architect 1-3 Month Box Fund (BOXX), Chemed (CHE), Canadian National Railway (CNI), Healthpeak Properties (DOC), Kayne Anderson Energy Infrastructure Fund (KYN), LXP Industrial Trust (LXP), Marathon Petroleum (MPC), Omega Healthcare Investors (OHI), Palo Alto Networks (PANW), Pembina Pipeline (PBA), Philip Morris International (PM), Travelers (TRV), Union Pacific (UNP), and Valero Energy (VLO).
In today's mailbag, feedback on part of Dan Ferris' Friday essay... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"In your Digest for July 17, you state: 'Physical law is effectively the law of God.' Actually, physical law is the law of man and matter. The law of God is spiritual. Big difference!" – Subscriber Biff B.
All the best,
Corey McLaughlin
Baltimore, Maryland
July 20, 2026
