There are winners in this market. And there are losers.
There always are.
Bull markets don’t mean everything goes up together. They mean capital rotates. Money flows. Leadership changes.
And if you’re on the wrong side of that rotation, it can feel like a bear market even while the indexes are printing highs.
Not everyone wins in the capital markets. There are always casualties.
What makes this environment different is how hard it has become to find them.
This week, more stocks on the New York Stock Exchange hit new 52-week highs than at any point in the past year.
Breadth is expanding. Participation is broad.
And yet some stocks are still falling apart.
That’s where things get interesting.
Over the weekend, we talked about how a breakout in small-cap financials could carry the most bullish implications in the world right now.
Regional banks pressing against decade-long bases is constructive for risk appetite and economic expectations.
Today, we are staying in financials. But we’re looking at a different corner of the group, broker-dealers and exchanges.
And, unlike the banks, very few of them are winning. That makes the ones that are winning stand out even more.
Let’s dig into the dispersion.
Broker-Dealers and Exchanges Rolling Over
If there is a soft spot in this market right now, it’s broker-dealers and exchanges.
While the broader averages are holding near highs and participation remains strong, this group is quietly deteriorating.
Take Nasdaq (NDAQ) and Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange.
These are not the indexes themselves. They are the businesses that own and operate the exchanges. They have not acted well to start the year.
That distinction matters.
When the companies that facilitate trading, clearing, and capital markets activity begin to lag meaningfully, it raises questions about underlying demand and participation.
This is not what you typically see from leadership groups in the strongest phases of a bull market.
The broader basket tells the same story.
The U.S. Broker Dealers & Exchanges ETF (IAI) has completed a failed breakout and confirmed a bearish momentum divergence:
Price pushed to marginal new highs. Momentum did not.
Instead, we saw a series of lower highs in momentum while price was stretching higher.
That type of non-confirmation is classic late-cycle behavior. It signals internal deterioration even as price appears stable on the surface.
We saw something similar in 2021 before the bear market really took hold. The cracks started in specific groups before they showed up in the indexes.
This doesn’t mean a bear market is here.
But it does mean dispersion is real. And when parts of financials are breaking out to decade highs while others are rolling over, that contrast becomes the story.
Now let’s head to Chicago.
Chicago: What’s in the Water?
If NDAQ and ICE are struggling, you have to ask why.
Because when you head west to Chicago, it’s a completely different story.
CME Group (CME) and Cboe Global Markets (CBOE) both keep hitting new all-time highs:
Same industry. Same broad theme. Totally different outcomes.
CME is a monster. It dominates futures and options tied to interest rates, equities, currencies, and commodities.
It operates the Chicago Board of Trade, the New York Mercantile Exchange, and COMEX, the old Commodity Exchange.
Rates, energy, metals, agriculture. If it trades, they probably clear it.
CBOE, operator of the VIX and a flagship options venue in the U.S., is smaller in size but no less impressive on the chart.
CME carries a market cap north of $100 billion and is one of the largest components in the broker dealers and exchanges index. CBOE is closer to $30 billion.
Different scale, same message: Buyers are showing up.
Meanwhile, other parts of the ecosystem are getting hit. Data providers like S&P Global (SPGI), Moody’s (MCO), and MSCI (MSCI) have been under pressure.
Yet even inside that weakness, you can find strength in names like Interactive Brokers (IBKR).
That’s the market right now.
Not broad based destruction. Not uniform strength.
Dispersion.
There are powerful breakouts in some corners of financials. There are failed moves and momentum divergences in others.
The indexes can make new highs. The advance-decline lines can confirm. And individual stocks can still get cut in half.
Winners and losers.
That’s the game.
You can’t hide inside an index and expect everything to lift you. You can’t assume strength in one corner means safety everywhere else.
There are real leaders here. And there are real landmines.
The data is clear. The dispersion is obvious.
If you’re not being selective, you’re volunteering to own the wrong things.
Pick the leaders.
Or get picked off.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs