Big Small-Cap View. R2000 new all-time high amid final wave rally that likely extends to 2750 (4.3% higher from yesterday’s close) by mid- to late Jan `26 before consolidating gains in the 2550 area. R2000 industries leading YTD include Aerospace & Defense (up 34% largely due to KTOS, AVAV), Electrical Equipment (up 27%, with BE, the R2’s third largest market cap company up over 57%), IT Services (up 24%, led by APLD) and Metals & Mining (up 18%, with HL rising 27% and small, loss-making CRML more than doubling and UAMY rising more than 70% in ‘26’s early few days.)
Sector rotation. Materials, Industrials and Health Care continue as sector leadership with Consumer Discretionary continuing to edge higher, leading relative momentum. Aero & Def, Commercial/Professional Services and Machinery spearhead Industrials’ relative strength.
Special Study I:Global ETF Rotation Map. Small-caps gaining relative strength as Mega-caps teeter.
Special Study II:YTD parallels to prior years. ’26 YTD tracking ’06 most closely.
Special Study III: Falling rents and New Home Prices should dampen ’26 inflation pressures.