Big tech is cracking but small caps are having their best year since 1991 — rota
Created
Thesis
Small caps are on pace for their best first-half since 1991, and the macro tailwinds are building. The Fed's preferred inflation gauge came in cooler than expected, damping rate-hike fears — small caps are the most rate-sensitive segment of the market because they rely more on borrowing. Meanwhile, mega-cap AI stocks like Palantir are getting crushed even during an 'AI boom,' suggesting investors are rotating capital away from crowded mega-cap tech and into smaller, cheaper names. This is the beginning of a market broadening-out.
Strategy approach
Build a strategy that enters long IWM (Russell 2000 ETF) when the PCE inflation print comes in below expectations and QQQ (Nasdaq ETF) is down 5% over the trailing 10 days. Hold for 30 days with a 6% stop loss.
Markets and timeframes
What this public preview can establish
- The thesis and strategy approach describe a market view. They do not show whether an entry or exit condition is currently met.
- No inspectable rule definition is included in this public preview. Do not infer a trigger from the thesis or approach.
- No trade count, win rate, or P&L figure is published in this preview. It cannot establish a performance record.
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