The one thing that seems clear is that something is bound to break here because when you look at the SMH relative to the RSP, it is not a chart that inspires confidence. It looks like the double top pattern mixed with a head-and-shoulder, and that can’t be a good mix.
The SMH to SPY looks the same.
The QQQ to IWM ratio has a similar feel.
The QQQ to KRE ratio has already broken down.
As does the QQQ to DIA.
It almost feels like the market keeps rotating around, keeping this ratio afloat. The XLK to XLF has already broken down, though it could use more follow-through.
While the XLU to XBI won’t budge.
You could see why it may be the case, for example, if someone were long tech and short small caps. Or whatever. Given the herd mentality, plenty of these trades are likely going on. The only question is whether or not something comes along to force that trade to unwind. I do not know.It is a frustrating market for anyone who isn’t invested in an S&P 500 index fund because this endless rotation only seems to push the S&P 500 higher while everything else just churns.More By This Author:Rates, Dollar, And Nvidia Drop Sharply On November 25, 2025The Fed Rate Cutting Cycle May Be OverHigher Rates And A Stronger Dollar May Significantly Tighten Financial Conditions
