The market is broadening well past the AI trade. After a soft PPI (Producer Price Index) reading eased inflation fears, 10 of the 11 S&P 500 sectors traded green on the day. The equal-weight S&P 500 keeps making new all-time highs alongside the market-cap-weighted index, a sign the rally is widening. Over the past couple of months, as the AI trade unwound a bit, gains spread to the rest of the sectors on the back of a strong second-quarter earnings season. Energy and commodities have joined too, so this is not just an equity move - other asset classes are participating.
Where the opportunity sits
I take a mostly name-specific view, but I read it through sector and asset rotation. Healthcare, industrials, and technology are the main drivers of sector outperformance. In commodities, gold and silver have been strong over recent weeks, and I have been building positions there. Uranium is also posting gains. Within each theme, I look for individual names to get exposure when possible.
Energy: Exxon Mobil (XOM)
Across the energy complex, almost anything with decent exposure works right now. My pick is Exxon Mobil (XOM). It recently broke out above the 157.50 resistance level, then came back to retest it, and it held the 157.12 level even on a day when energy was the only sector in the red. That base sets up a move higher, with an upside target of 175 - the all-time high on XOM - as the company keeps generating record free cash flow and starts paying down debt.
The path to easing Middle East tensions still looks drawn out. I see no clear way the Strait of Hormuz and the Red Sea reopen in the next few weeks. Oil prices have stayed relatively low because those routes remain partly blocked, but the upside for oil is intact, and XOM is one way to seek that upside.
Options on energy stocks are relatively cheap right now. My trade: buy call spreads to the upside. On XOM, go out to the September 18th monthly expiration, buy the slightly in-the-money 155 call, and sell the 170 call, just under the all-time high. Earlier in the day that debit spread cost about 6 dollars and offered roughly a 1.5-to-1 risk-to-reward ratio. I use an in-the-money debit spread on purpose: the breakeven sits only a couple of dollars above the current price, so I pay less in time decay while oil volatility stays relatively high and I still get exposure to it.
Oracle (ORCL)
Oracle (ORCL) took more than a 50% haircut over the past couple of months and is still down year to date. CoreWeave (CRWV) earnings earlier this week showed AI infrastructure buildout is not slowing - it is gaining momentum - and ORCL caught a bid alongside that report. ORCL broke out above the 150 level, a key level I was watching as a trigger to start adding to the position. With the breakout above 150 on strong volume while outperforming the S&P 500, the upside target is 185. After the 50% drop, ORCL looks far more compelling on valuation given its growth profile and how profitable it remains. Among the hyperscalers, it offers the most attractive risk-to-reward to the upside.
Commodities
For metals, I use the ETFs GLD and SLV to get upside exposure to gold and silver. Most miners are not liquid enough for options traders, so I avoid individual miner exposure except Barrick Gold, or through GDX, the gold mining index. In uranium, I like Cameco (CCJ) to the upside - the largest uranium miner, based in Canada - again for options liquidity, or the uranium ETF URA.
Technology and software
The big surprise has been how strong software is. Software was largely decimated over the past couple of years as the AI trade raised fears of disruption. Names that were seen as on the chopping block are coming back to life: Adobe (ADBE), Zoom (ZM), and Salesforce (CRM). I am bottom-feeding in some of these, and they are showing some of the most strength in this market.
Among consumer names, DoorDash (DASH) is one I have added quite a bit of exposure to over the past couple of months. Outside software, the traditional AI names still make sense to hold - Broadcom (AVGO) and Micron (MU). Hewlett Packard Enterprise (HPE) is another worth a look, hitting a new 52-week high on the day.
