Small cap IWM breaks downtrend vs. SPY going back since 2021

Near-term trends are bullish for SPX, and I anticipate a sharp rally to finish the month of October after an interesting period of sector rotation in recent weeks.  Industrials, Consumer Discretionary, and Small-cap stocks have begun to show notable strength this week, while Financials appear close to turning higher as well. Meanwhile, “Magnificent 7” haven’t been so magnificent over the last month, and look more like the “Lag 7” than the “Mag 7” with notable underperformance lately out of $AMZN, $NFLX, $META, $MSFT, while even NVDA has begun to lose momentum.  Meanwhile, IWM has just successfully broken out above SPY, going back since 2021, which bodes well for continued near-term outperformance by Small-caps.  Overall, the combination of time-based indicators and Elliott-wave structure seems to project to late October.   Bottom line, Treasuries, Equities, and Cryptocurrencies still have a good likelihood of pushing higher into late October, and until trends turn down, I’m skeptical that “Tariff talk” will do much to derail this rally.

No change from yesterday’s thinking.  In the short run, the rebound favors market bulls, and I suspect that a rally back to new highs is probable.   

I don’t suspect that 6555 will be broken in SPX over the next couple of weeks, and a coming push back to 6800 and potentially over this level looks possible between now and late October.

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