Even with Monday’s correction, small caps continue to see rotation.
The Russell 2000 ETF (NYSEARCA: IWM) had a topping pattern last week.
Nonetheless, the outperformance of the S&P 500 (NYSEARCA: SPY) remains a good sign for this index.
The Retail Sector ETF (XRT), on the 3rd day of correction since making a new 2025 high, also remains in decent shape.
Biotech (IBB) is also a winner, along with regional banks.
IBB, also outperforming SPY, closed on a new multi-month high.
Regional Banks (KRE), while gapping lower to start the week, cleared the July 6-month calendar range over 64.00.
And KRE outperforms the benchmark as well.
The weak link remains transportation and Semiconductors; however, they are not yet “anchors” to the market.
Note that the Transportation Sector (IYT) is sitting on the 50-DMA, so that is key to watch.
Plus, IYT remains an outperformer to SPY.
The Semiconductors (SMH) is the only one in the Family underperforming the benchmark.
In addition, SMH broke below the 50-DMA.
While this is just a weak link, if SMH becomes an anchor, it could spook the rest of the Family.
For now, as I always say, the market is as strong as its weakest link.
But the rotation to the rest of the Family is good news unless a weak link becomes an anchor.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
