Yesterday was another one of those lazy summer sessions with light volume. It feels like this is a crossroads of sorts, and the market is gearing up for the next leg higher. The thing is, the winners have made gargantuan moves, and the pack is so far behind.

*The trick is how to hand off the baton.

(*From 1912 to 2021, the U.S. men’s team ran the 4x100 relay 41 times in the Olympics and world championships and either finished first or second 27 times or got disqualified 13 times.)

The question now is, where does the rally baton go?

Bespoke Research posted a great table showing the quick change in investor appetite in their quest to keep the rally and big-time gains moving along.

• 20 worst performers in the first half of the year (1H): +5.41% month-to-date (MTD)

• 20 best performers in 1H: -2.05% MTD

Yesterday’s big gainers in the Russell 1000 Index included several stocks that were once market leaders but were subsequently relegated to the island of misfit stocks. I think most of these names have room to the upside, the key is volatility.

Major Indices Year to Date:

• S&P 500: +5.85%
• Nasdaq: +5.74%
• S&P 400: +1.93%
• Russell 2000: +0.04%

Yesterday, small-caps rocked across the board, and maybe this time the move is sustainable.

Small But Mighty?

The iShares Russell 2000 ETF (IWM) has surged above the 50-and 200-day moving averages; money flow (MFI) is strong, as is the relative strength index (RSI). It's not hard to see this index retesting its old high soon.

For now, the overall market bias remains firmly upside.

Market Breadth	NYSE	NASDAQ
Advancers	1,764	2,905
Decliners	994	1,568
New Highs	84	118
New Lows	9	48
Up Volume	2.85 billion	5.27 billion
Down Volume	1.57 billion	1.95 billion

Tariff News & Developments

This week, tariff development has left everyone feeling somewhat underwhelmed. The talking heads continue to console themselves with the “Taco Trade” nonsense, not realizing that Trump is getting everything he wanted.

• Higher tariff revenue
• Higher stock market
• Contained inflation

Last night, the president hinted at deal announcements today.

I think big countries, including Japan, South Korea, and the European Union, are on the brink of agreeing to deals.

Once this is essentially put to bed, the smartest folks in the room will have nothing to blame their lackluster performance on and will have to throw in the towel, which means big-time buying.

Today’s Session

Risk appetite and near-term outlook are improving.

I like to see the fear index, or Volatility Index (VIX), crashing.

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