I Feel Sorry for Your Bubble

Putting to one side the fade in large cap tech today, the perennial lagging sectors like regional banks (KRE ETF) and smaller cap biotech (XBI ETF, below on the daily chart) have not quite lived up to the many calls for a bonafide rotation into the back half of 2025 and beyond. 

For a good while now we have been in both in a bifurcated market (extremely strong, crowded, adored winning stocks and sectors contrasted to glaring, out of favor losers) and a bifurcated economy (flush, ultra-wealthy throwing money around endlessly to keep prices higher, contrasted to lower income, working class, middle and upper middle class consumers fighting to make ends meet). 

The point that we have been making all along both here and with Members is that, historically, true bifurcation ends in a bearish manner--The weak stay weak and the strong eventually succumb.

That view runs contrary to the conventional wisdom of the weak parts firming up for rotation while the strongest parts take a mere breather. Indeed, in a healthy bull run that latter scenario often takes place. 

But when classic bifurcation presents itself, as we have now, it is an unhealthy circumstance with the crowding into the few, bloated, expensive winners who only go up (See: NVDA PLTR, e.g.) while the weaker sectors flounder at best.

It is precisely due to this bifurcation that you are seeing even steadfast bulls throw their hands up in frustration because they were betting on rotation down to the laggards in lieu of chasing up the likes of META.  Again, it is not "healthy," in the sense of strong underlying price action, even of the indices are melting up, in the same way the economy is not healthy if only the wealthiest are prosperous.  

On the XBI daily chart, now the breakdown threat below $84 in play. LABD is a bear ETF worth watching. One has to think is the Nasdaq is finally topping out into bearish seasons then the bifurcation unwind sees biotechs break down and retest the April lows.