Founder’s Note: Grant Hawkridge is the human intelligence behind the NOW Score system that underpins our stock-selection process for The Primary Trend.
Grant’s contributions here and to The Divergence and TrendLabs in general are hard to quantify.
But he always brings useful data on Saturday morning. – JC
By Grant Hawkridge
G’day, Grant here again.
Every second headline right now is either calling AI “the future” or “the next bubble.”
That usually happens when a theme gets too big to ignore. People stop debating whether it matters and start debating how long it can possibly last.
But I think the market is starting to realize something bigger.
The real story is probably not that AI is important. The real story is that the buildout behind it might be much larger and longer-lasting than most people expect.
Compute demand is still exploding. Companies are still spending. And the market is starting to price in the idea that this is not a short-term cycle anymore.
That’s also why the conversation around AI has started to change.
A year ago, most of the discussion was about whether this was even real. Then it became about Nvidia (NVDA), then semiconductors.
Now you’re starting to hear people talk about infrastructure, power demand, software, automation, data centers, and what this could mean for businesses over the next five or 10 years.
That’s usually what happens when a trend keeps surviving every reason people give for it to slow down.
The conversation is expanding because the trend itself is expanding.
And, honestly, that’s one of the reasons I’m looking forward to heading over to the U.S. next week to catch up with JC, Sam, and Jason.
The best market ideas rarely come from one person sitting alone trying to predict the future. They usually come from debate.
Someone sees momentum. Someone else sees risk appetite. Another person focuses on breadth, positioning, or leadership.
You challenge each other long enough and eventually the weak ideas start falling apart. The strong ones keep holding up.
Markets work the same way.
Price normally moves first. The news and the explanations usually come later. By the time the narrative feels obvious, the market has often already been moving for months.
And that’s what makes this market so interesting right now.
The Strength Is Starting To Spread
Strong trends usually don’t stay isolated for long. If a move is real, you eventually start seeing confirmation show up elsewhere.
One of the biggest things we’ve been tracking at TrendLabs is our Intermarket Risk Radar Composite.
The Intermarket Risk Radar Composite is designed to measure whether the market is behaving in a risk-on or risk-off environment based on cross-asset leadership.
The important part right now is not just that the reading remains high in a risk-on zone. It’s that the market never actually shifted into risk-off since the start of 2025.
Even during the most recent correction, the composite stayed above the 0.40 level, which defines the switch into the risk-off regime.
Most people experienced volatility and assumed the market was breaking down underneath the surface.
But risk appetite never fully disappeared. Money kept rotating, even while the headlines became more cautious.
Right now, technology is still the only sector in our Sector Rotation Engine, showing both an uptrend and relative leadership at the same time.
That matters because strong bull markets usually have a clear leadership group pulling the market higher. And for most of this move, semiconductors have been carrying that role almost alone.
We’ve all seen the semiconductor charts. Breakout after breakout. New highs after new highs. Nvidia, Broadcom (AVGO), and the entire AI infrastructure trade have been leading this market for months.
But leadership can only stay narrow for so long before one of two things happens.
Either the leaders eventually roll over.
Or the strength starts spreading.
Semiconductors are already back at new highs. That part is obvious.
But software stocks might quietly be starting to join the move.
After spending some time trapped below the November 2021 highs, software has now reclaimed that breakdown zone.
If software stocks continue this most recent move higher alongside semiconductors, the implications for this bull market become much bigger.
Because now you’re no longer talking about one narrow leadership group carrying the market.
Now you’re talking about expansion. That’s usually what happens in stronger bull market phases.
Leadership starts broadening beneath the surface. More groups participate. More stocks start working, and money flows into the next layer of the trend.
And if software starts confirming the semiconductor move, this bull market could still have another leg higher ahead of it.
Following the Strength
That’s the type of environment we want to be leaning into.
We’re not trying to predict where the next leadership group will come from before the market shows its hand.
We want to see where money is already flowing and whether that strength keeps expanding beneath the surface.
Right now, semiconductors are still leading the move. That hasn’t changed.
But if software stocks start reclaiming a leadership role alongside semis, it opens the door for a much broader technology advance than most people are currently positioned for.
That’s where the NOW Score becomes useful for us at The Primary Trend.
We’re not trying to guess which stocks will become leaders six months from now. We want to identify where trend, momentum, and relative strength are already starting to improve in real time.
That’s why we spend so much time focused on our NOW Score Top Movers table.
When a stock suddenly jumps in NOW Score rankings, it usually means something underneath the surface has started changing.
Lately, we’re starting to see more software names showing up on that table.
That’s important because leadership normally expands in stages during stronger bull market phases. First semiconductors, then software, and eventually the move starts spreading further across the market.
Right now, technology continues to be where the market keeps rewarding strength.
And if software keeps showing up alongside semiconductors, the market may already be signaling that this move is getting bigger, not smaller.
Happy hitting🏌️⛳
Grant Hawkridge
Quantitative Analyst, TrendLabs