September 2, 2025
Mish's Daily
By Mish Schneider
Even with Monday’s correction, small caps continue to see rotation.
IWM had a topping pattern last week.
Nonetheless, the outperformance of the SPY remains a good sign for this index.
Granny Retail XRT, on the 3rd day of correction since making a new 2025 high, also remains in decent shape.
Biotech is also a winner, along with regional banks.
IBB, also outperforming SPY, closed on a new multi-month high.
Regional Banks KRE, while gapping lower to start the week, cleared the July 6-month calendar range over 64.00.
And KRE outperforms the benchmark as well.
The weak link remains transportation and Semiconductors; however, they are not yet “anchors” to the market.
Note that IYT Transportation is sitting on the 50-DMA, so that is key to watch.
Plus, IYT remains an outperformer to SPY.
SMH or Semiconductors is the only one in the Family underperforming the benchmark.
In addition, SMH broke below the 50-DMA.
While this is just a weak link, if SMH becomes an anchor, it could spook the rest of the Family.
For now, as I always say, the market is as strong as its weakest link.
But the rotation to the rest of the Family is good news unless a weak link becomes an anchor.
Educational purposes only, not official trading advice.
Limited offer.
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ETF Summary
(Pivotal means short-term bullish above that level and bearish below)
The divergence between growth and value continues to widen
S&P 500 (SPY) 628 major support
Russell 2000 (IWM) 226 huge support
Dow (DIA) 448 support
Nasdaq (QQQ) 575 now resistance with 560 huge support
Regional banks (KRE) Over the July calendar range so 64 key to hold
Semiconductors (SMH) 293 resistance 270 support
Transportation (IYT) This is our weak link not even over the July range. Watch 73.50 to clear 70.00 to hold
Biotechnology (IBB) Strong comeback 140 pivotal
Retail (XRT) 84 pivotal and 82 key support
Bitcoin (BTCUSD) 107k good low to hold but still needs to clear back over 114k
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