Big Small-Cap View. The R2000 in last thrust of its penultimate superwave off the GFC low. Wave counts argue for a move to challenge 3000 followed by retrace that looks to retest 2555, and possibly as low as 2390, ahead of mid-terms. Longer term `09 to `29 bull market target is 4820.
Sector rotation. Sector rotation grid remains “risk on” led by Energy, Tech, Industrials and Materials. Health Care and Fins retreated to the neutral gray area while Real Estate attempts a fresh green zone breakout. Consumer Discretionary and Utes remain the main sources of relative funds. Software is making a fresh attempt to break out; up 4.7% MTD, led by EGHT, RXT, FIVN, CXDO, WEAV and SOUN. Biotech, while still up and leading MTD, is expressing increasing signs of near-term relative distribution, which is generally helpful to managers. Similarly, Banks have lost some near-term relative momentum. And while Consumer Discretionary continues to struggle overall, there are pockets of stocks showing relative strength, much of it focused in Hotels & Restaurants so taking a look at that grid’s lower to middle right-hand side stocks is worth the gander for stocks that may be primed for a rebound. Lastly, while we generally disregard Comm Services, we are noticing Media’s relative strength particularly in ADV, MGNI, PUBM and NEXN.