Signs of Healthy Rotation

Today marks the first day in 8 that the Russell 2000 ($IWM) pierced below its prior days low, and even more importantly this could mark the first down close in 15 days for the small caps.

It’s safe to say, US equity markets have been on a bit of a run recently.

But while we finally see some signs of profit taking in the strongest parts of the market today, we’re seeing another sector emerge to new multi-year highs.


The technology sector $XLK has been left behind in terms of relative performance since the market run up following the US election started, but today we’re seeing some hints of healthy rotation and a catch-up into some of these names.

$XLK top 5 holdings are names like: $AAPL $MSFT $FB $T $GOOGL

And technology isn’t the only recent laggard finding some newfound love, we also have utilities $XLU having a strong day as well as some consumer staples $XLP.

This type of rotation typically coincides with strong markets that tend to work off overbought conditions with a consolidation through time as money rotates across sectors, rather than a meaningful pullback in price.

As always, thanks for stopping by and reading and best of luck trading.

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Evan Medeiros

Evan is the founder of the Trade Risk. With 25 years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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