Even with Monday’s correction, small caps continue to see rotation.  

IWM had a topping pattern last week. 

Nonetheless, the outperformance of the SPY remains a good sign for this index.  

Granny Retail XRT, on the 3rd day of correction since making a new 2025 high, also remains in decent shape.  

Biotech 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 IYT Transportation is sitting on the 50-DMA, so that is key to watch.  

Plus, IYT remains an outperformer to SPY. 

SMH or Semiconductors 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. 

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