Big Small-Cap View. The R2000 finished powerful “third of third” in Super Wave 3 off the GFC low. Wave counts argue for a 2745 area retest ahead of mid-terms as the R2000 effects its deepest 50 DMA violation since end of last correction in April. Any near-term rally here likely fails ahead of 50 DMA. Violating 2700 would bring 2430 into mix. Longer term `09 to `29 bull market target is 4820.
Sector rotation. Holding on to Beta even as cyclical trade has lost some of its luster. Health Care and Energy continue as sector leadership with modest bounces in Tech (back to the green zone) and Industrials (back to neutral). Higher dividend yielding Fins, Utes and Staples are leading near-term relative momentum while Consumer Discretionary has again collapsed, albeit near-term oversold. Materials also retreated to the red zone.