Core Insights - The year-end rally for stocks has been disappointing, with the SPDR® S&P 500 ETF Trust (SPY) returning only 1% in December and the Nasdaq 100 ETF (QQQ) finishing flat [1] - US large caps outperformed small and mid-cap peers with an 18% return for the year, but lagged behind international equity markets [1] Market Performance - The Russell 2000 ETF (IWM) experienced a fractional decline in December, while the Vanguard FTSE All-World ex-US ETF (VEU) returned nearly 3% [2] - The Aggregate Bond ETF (AGG) remained close to unchanged, and the US Dollar ETF (UUP) decreased by 1% [2] - WTI Crude Oil ETF (USO) and Bitcoin ETF (IBIT) fell between 2% and 4%, while gold surged over 60% in 2025, marking its best year since 1979 [2] Sector Performance - In December, five out of eleven S&P 500 sector ETFs were negative, with Utilities (XLU) being the primary drag due to higher long-term interest rates and a cooling AI trade [4] - Financials led the S&P 500 sector performance with a 4% increase, followed by Communication Services with a 3% gain, and comparable increases in Materials (XLB), Industrials (XLI), and Consumer Discretionary (XLY) [3]

Group 1: Russell 2000 ETF (IWM) Analysis - The Russell 2000 ETF (IWM) is currently facing a potential triple top pattern, indicating a bearish reversal from an uptrend to a downtrend [1][2] - The support level for IWM is identified around 210-215, with recent price rejections at higher levels [3] - Recent lows for IWM over the last three weeks are 235.42, 236.75, and 237.55, with a concern for a potential breakdown if the price closes below 237.55 [4] Group 2: Retail Sector ETF (XRT) Insights - The Retail Sector ETF (XRT) reached a peak high last week, but overall performance is underwhelming compared to the all-time highs of 2021 at 104 [6] - A potential reversal top is forming for XRT, with a critical level at 86.46; closing below this could signal a larger correction [7][8] - If a correction occurs, a decline to the 80 area is anticipated, with current performance on par with the benchmark [9]

Core Insights - The Federal Reserve's first rate cut of the cycle is typically a bullish signal for small-cap stocks, as highlighted by John Rowland during a recent livestream [1] - The Russell 2000 ETF (IWM) has reached a new high, marking its first of the year and the highest close since 2021, indicating a three-year breakout [2][4] Small-Cap ETF Comparison - The IWM has already broken to new highs, while the S&P SmallCap 600 ETF (VIOO) is lagging but shows a similar V-bottom formation, suggesting potential upside [4] - The Russell 2000 consists of approximately 2,000 companies, many of which are unprofitable or of low quality, while the S&P SmallCap 600 includes around 600 companies that are stringently screened for liquidity and profitability, representing the "cream of the crop" [5][6] Market Dynamics - Small-cap stocks are experiencing a breakout, but the approach to investing in them is crucial; IWM provides broad exposure with weaker links, whereas S&P 600 emphasizes profitability and liquidity [6] - Momentum setups in both IWM and VIOO suggest follow-through potential, and monitoring the relative strength of the S&P 600 could indicate if quality is leading [7] - With the onset of rate cuts, small-caps have historically outperformed as financial conditions improve, making it essential to track economic indicators and upcoming Fed data for potential market movements [7]

Market Overview - The Russell 2000 (IWM) reached an all-time high of 244.46 in November 2021 and has shown a slight increase to 244.98 in November 2024, with a recent high of 245.14 on September 18 [1][2]. Technical Analysis - A monthly close above 243.50 for IWM is necessary to maintain a bullish bias [2]. - The Russell 2000 is currently outperforming the S&P 500, indicating positive momentum for small-cap stocks [11][12]. - The Real Motion indicator shows strong momentum, with red dots clearing the Bollinger Band, but it needs to remain above the Bollinger Band for continued strength [13]. Economic Indicators - A strong consumer base, supported by good wages and a robust labor market, is essential for sustained growth in US-centric companies [3]. - Retail remains a laggard, with the XRT index being 30% away from its 2021 highs, indicating potential challenges in the retail sector [4]. Market Sentiment - There are no significant bearish indicators currently, suggesting a positive outlook for the market [14].

Core Viewpoint - The semiconductor sector, particularly the Semiconductors Sector ETF (SMH), has shown significant price movements, with potential for both profit-taking and corrections in the near term [5][6]. Semiconductor Sector - The semiconductor companies, including notable names like Nvidia (NVDA) and Broadcom, have recently reached new all-time highs, indicating strong momentum in the sector [2]. - SMH rallied above its January 6-month calendar range in June but faced resistance in July, suggesting a critical point for future price movements [7]. - Current momentum in SMH remains strong but has not reached new all-time highs alongside price, indicating a potential divergence [7]. Russell 2000 ETF - The Russell 2000 ETF (IWM) attempted to clear the July 6-month calendar range but was unsuccessful, mirroring some characteristics of SMH [9]. - IWM's performance in early July showed improvement, but it has not yet cleared significant resistance levels, which could impact future rallies [12]. - A convincing breakout above the 226-227 range for IWM could signal a strong upward trend, contingent on the retail sector (XRT) also rallying [10].