Small-Cap Rotation Intensifies as Materials Hit Overbought Extremes

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Macro Overview

Global equity markets displayed a distinct rotation toward domestic small-and-mid-cap equities today, as the IVV (S&P 500) managed a modest +0.26% gain while broader U.S. breadth improved significantly. International developed markets (EFA) remained essentially flat, while emerging markets (EEM) gained +0.59% behind significant strength in Southeast Asia. A notable outlier remains South Korea (EWY), which continues to trade in overbought territory with a 14-day RSI of 75.89. In the fixed income space, credit-sensitive assets like preferreds outperformed as the 10-year Treasury yield climbed toward 4.17%, while broad commodities (DJP) and digital assets (IBIT) faced selling pressure following a de-escalation of geopolitical tensions.

U.S. Size & Style

Small-cap and mid-cap equities dominated the session, significantly outperforming their large-cap counterparts as investors sought value outside of crowded technology names. The IJS (Small Cap Value) led the style boxes with a +1.52% gain, pushing its RSI to an overbought reading of 73.29. Breadth within the small-cap space remains robust, with 77.9% of IJR constituents trading above their 200-day moving average. Conversely, Large Growth (IVW) lagged the group, as momentum in mega-cap technology began to consolidate near its 50-day SMA.

Name (Ticker) 1-Day % Change 1 Month 3 Month YTD 1 Year
Small Value (IJS) +1.52% +5.53% +10.98% +7.77% +13.73%
Mid Growth (IJK) +1.48% +6.15% +8.54% +6.95% +11.53%
Small Cap (IJR) +1.43% +4.80% +8.64% +7.39% +11.96%
Small Growth (IJT) +1.42% +4.13% +6.43% +6.96% +10.19%
Mid Cap (IJH) +1.17% +5.28% +8.37% +6.42% +11.43%
Mid Value (IJJ) +0.96% +4.37% +8.13% +5.85% +11.05%
Large Growth (IVW) +0.33% +1.57% +2.95% +0.45% +20.86%
Large Cap (IVV) +0.26% +1.99% +4.42% +1.52% +18.24%
Large Value (IVE) +0.18% +2.40% +5.96% +2.69% +14.96%

U.S. Sectors & Industries

The cyclical tilt of the market was evident as Industrials (XLI) and Utilities (XLU) led the sector leaderboard, supported by strong internal breadth with 100% of Materials (XLB) constituents trading above their 50-day SMA. Technical positioning in Materials has reached an overbought RSI of 75.84, suggesting potential near-term exhaustion. Meanwhile, Energy (XLE) and Health Care (XLV) lagged, with Biotech (XBI) falling nearly 2% as pharmaceutical sentiment softened following mixed clinical data.

Name (Ticker) 1-Day % Change 1 Month 3 Month YTD 1 Year
Utilities (XLU) +1.02% +1.66% -5.41% +2.16% +16.81%
Industrials (XLI) +0.92% +5.96% +9.00% +6.87% +24.20%
Real Estate (XLRE) +0.75% +3.04% +0.60% +3.35% +7.30%
Technology (XLK) +0.53% +2.37% +2.48% +1.03% +26.01%
Materials (XLB) +0.43% +9.06% +10.95% +7.96% +14.72%
Financials (XLF) +0.41% -0.79% +2.47% -0.73% +11.40%
Cons. Discretionary (XLY) +0.37% +1.00% +4.77% +2.76% +8.89%
S&P 500 (SPY) +0.27% +1.99% +4.37% +1.51% +18.15%
Cons. Staples (XLP) +0.17% +4.26% +4.80% +6.04% +11.01%
Comm. Services (XLC) -0.37% +0.01% +1.03% -1.28% +21.13%
Health Care (XLV) -0.57% +0.98% +10.57% +1.40% +13.62%
Energy (XLE) -0.94% +6.24% +11.24% +6.49% +6.30%

Global Thematic

Thematic performance was headlined by Global Private Equity (PSP) and Industrial Renaissance (AIRR), both gaining over 2% as investors favored capital-intensive and infrastructure-focused narratives. Conversely, Digital Assets and Blockchain themes saw heavy distribution, with Blockchain (IBLC) and Crypto Industry (BITQ) laggards declining more than 2.5% in a risk-off rotation for high-volatility tech segments.

Name (Ticker) 1-Day % Change
Leaders
Global Listed Private Equity (PSP) +2.25%
Industrial Renaissance (AIRR) +2.20%
Junior Silver Miners (SILJ) +1.77%
Intelligent Machines (IQM) +1.69%
AI Infrastructure (TCAI) +1.68%
Laggards
Blockchain and Tech (IBLC) -2.84%
Crypto Industry Innovators (BITQ) -2.55%
Global X Blockchain (BKCH) -2.52%
Medical Breakthroughs (SBIO) -2.40%
Social Media (SOCL) -2.32%

Developed ex-U.S. & Emerging Markets

International performance was dominated by Asian markets, with Hong Kong (EWH) and South Korea (EWY) both posting gains above 1.2% in the developed space. Emerging markets were led by Thailand (THD), which jumped nearly 2%, while India (INDA) struggled, currently trading with a weak RSI of 43.03 and remains below its 50-day SMA.

Name (Ticker) 1-Day % Change 1 Month 3 Month YTD 1 Year
Developed Markets
Netherlands (EWN) +1.53% +8.85% +9.76% +8.01% +43.84%
Hong Kong (EWH) +1.51% +6.95% +11.66% +7.34% +49.49%
South Korea (EWY) +1.29% +22.48% +33.35% +14.23% +107.30%
Japan (EWJ) +0.45% +4.46% +9.06% +5.80% +34.86%
Australia (EWA) +0.41% +2.60% +0.81% +1.76% +13.02%
Canada (EWC) +0.07% +3.56% +9.33% +2.39% +38.49%
Developed ex-U.S. (EFA) -0.04% +4.10% +7.69% +3.36% +35.14%
U.K. (EWU) -0.42% +5.06% +9.39% +2.52% +38.37%
Germany (EWG) -0.57% +2.71% +4.12% +1.74% +34.05%
Switzerland (EWL) -0.57% +2.47% +6.85% +0.93% +32.34%
France (EWQ) -1.02% +1.00% +2.72% +0.91% +28.79%
Emerging Markets
Thailand (THD) +1.98% +0.06% +2.96% +1.07% +6.90%
Taiwan (EWT) +1.17% +9.80% +8.31% +5.92% +36.60%
Brazil (EWZ) +0.60% +2.91% +17.87% +5.00% +47.97%
Emerging Markets (EEM) +0.59% +8.96% +9.45% +6.18% +42.29%
South Africa (EZA) +0.48% +11.76% +17.82% +7.18% +85.55%
Indonesia (EIDO) +0.42% +2.90% +12.76% +2.78% +7.72%
Malaysia (EWM) +0.28% +6.05% +11.96% +3.36% +25.49%
China (MCHI) +0.06% +5.75% +1.78% +5.86% +43.46%
India (INDA) -0.06% +0.23% -1.00% -1.54% +3.78%
Mexico (EWW) -0.18% +5.95% +13.37% +5.65% +56.63%

Fixed Income

Fixed income performance bifurcated along the yield curve today, as long-duration assets like Government Long (SPTL) remained flat while high-yield credit and preferred securities (PFF) attracted capital, gaining +0.25%. The credit environment remains resilient with Bank Loans (BKLN) holding steady, whereas intermediate government debt (SPTI) felt the pressure of rising yields, declining -0.17% on the day.

Name (Ticker) 1-Day % Change 1 Month 3 Month YTD 1 Year
Core & Multisector
Preferred Stock (PFF) +0.25% +2.73% +2.30% +2.78% +6.86%
Convertible (CWB) +0.21% +5.20% +0.69% +4.96% +20.82%
Multisector (PYLD) -0.07% +0.94% +1.95% +0.52% +10.15%
Short-Term (BSV) -0.09% +0.25% +0.69% -0.03% +5.98%
Taxable Core (AGG) -0.13% +0.65% +0.47% +0.34% +7.77%
Government & Treasuries
Government Long (SPTL) +0.00% +1.45% -0.86% +1.13% +7.38%
Ultrashort (BIL) +0.00% +0.29% +0.94% +0.13% +4.11%
Government Short (SPTS) -0.07% +0.15% +0.70% -0.07% +5.05%
Intermediate (SPTI) -0.17% +0.23% +0.36% +0.00% +7.57%
Corporate & Specialty
High Yield (HYG) +0.00% +1.01% +1.76% +0.51% +8.25%
Bank Loans (BKLN) +0.00% +0.59% +2.53% +0.19% +6.72%
Mortgage Backed (MBS) -0.18% +0.96% +1.22% +0.46% +9.21%
International & EM
Emerging Local (EMLC) +0.12% +1.71% +3.79% +0.66% +19.23%
Emerging USD (EMB) +0.04% +0.41% +2.10% +0.12% +13.04%
International (IGOV) -0.31% -0.31% -1.13% -0.34% +11.14%
Municipals
Municipal High Yield (HYD) +0.07% +1.34% +2.30% +0.68% +4.20%
Municipal Short (SUB) +0.01% +0.72% +1.14% +0.48% +4.25%
Municipal Long (MLN) -0.03% +0.90% +0.55% +0.22% +3.46%

Commodities

Broad commodities (DJP) retreated as energy and industrial metal prices cooled on signs of stabilized global supply. Natural Gas (UNG) provided a rare positive catalyst, rising +0.59%, while WTI Crude Oil (USO) fell over 2% following a reduction in geopolitical risk premiums. Precious metals also saw profit-taking after hitting recent record highs, with Palladium (PALL) leading the laggards with a nearly 3% decline.

Name (Ticker) 1-Day % Change 1 Month 3 Month YTD 1 Year
Broad Commodities (DJP) -0.88% +5.62% +9.57% +4.47% +14.72%
Agriculture
Soybeans (SOYB) +0.69% -2.62% +1.39% +0.14% -0.68%
Broad Agriculture (DBA) +0.31% +0.64% -0.27% +0.27% -0.83%
Energy
Natural Gas (UNG) +0.59% -17.34% -13.30% -15.99% -46.13%
Energy (DBE) -1.39% +1.72% +1.87% +1.63% -9.38%
WTI Crude Oil (USO) -2.04% +4.77% +3.10% +2.85% -15.66%
Industrial Metals
Industrial Metals (DBB) -1.06% +12.28% +19.60% +5.88% +30.96%
Copper (CPER) -1.95% +10.92% +19.62% +5.18% +33.22%
Precious Metals
Precious Metals (DBP) -0.98% +14.29% +20.69% +11.69% +86.73%
Gold (GLD) -0.61% +6.96% +9.28% +6.82% +70.09%
Silver (SLV) -1.47% +43.38% +72.40% +29.34% +198.00%
Palladium (PALL) -2.73% +15.43% +17.51% +13.85% +87.24%

Cryptocurrency

Digital assets faced a broad sell-off during today’s session, with major tokens pulling back from recent psychological resistance levels. Solana (SOLZ) and XRP were the hardest hit among major assets, dropping more than 4.3% as liquidity rotated back into defensive equity sectors. Bitcoin (IBIT) and Ethereum (ETHA) showed relative resilience but still closed deep in the red as investors reassessed the immediate regulatory outlook following the Senate Banking Committee’s latest deliberations.

Name (Ticker) 1-Day % Change 1 Month 3 Month YTD 1 Year
Solana (SOLZ) -4.36% +12.87% -28.95% +13.58% N/A
XRP (XRP) -4.31% +9.63% N/A +12.57% N/A
Ethereum (ETHA) -2.97% +12.25% -17.65% +10.70% -4.68%
Bitcoin (IBIT) -2.60% +10.97% -14.52% +8.76% -4.66%
Multi-Coin (NCIQ) -2.51% +11.12% -15.64% +9.76% N/A

What to Watch Today

Market attention remains squarely on the recent CPI data release, which showed headline inflation remaining sticky near the 3% level, potentially complicating the Federal Reserve’s path for rate cuts in the first half of 2026. Investors are closely monitoring the ongoing flurry of bank earnings, where results from major institutions have introduced fresh volatility into the financial sector following proposed policy shifts in credit interest caps. Finally, geopolitical narratives regarding energy supply and international trade tariffs continue to serve as the primary drivers for cross-asset volatility as the new administration’s policy agenda takes shape.

This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.

This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.