BraVoCycles

Market breadth was weak on Friday.

8 out of 11 sectors had negative breadth.

While SPY was up 0.72%, its equal-weight counterpart, RSP, was down 0.17%.

SPX was mainly up due to strength in select Magnificent 7 stocks and industrials, but that may not last much longer.

Russell 2000 vs S&P 500

IWM to SPY Ratio – Cycle Analysis

Cycles suggest that RUT is likely to underperform SPX until Oct '26.

If you're overweight small-cap stocks, it's not too late to trim your positions.

Rotation, Rotation, ..., How much Longer

SPX Cap-Weighted vs Equal-Weight – Cycle Analysis

The cycles of the SPY / RSP ratio have done a great job forecasting the relative performance of SPY versus RSP, which led me to suggest 2+ months ago a rotation from momentum big-cap stocks into the broader market.

Over the past couple of months, SPY has underperformed due to weakness in semis/AI, while the broader market remained relatively strong.

According to cycle analysis, RSP (and the broader market) is now expected to underperform until around Oct '26.

Micron Technology (MU) Analysis

·         Micron Technology is one of the dominant computer memory chip companies in the world.

·         Chip memory stocks had parabolic runs due to strong demand caused by the AI infrastructure build.

·         Usually, parabolic runs are followed by sharp reversals, rather than sideways corrections.

·         This is what we are seeing in MU price pattern.

·         It likely topped with negative RSI divergence, then dropped in seemingly five waves, plus an ugly candle on Friday.

·         This is an ominous Elliott Wave pattern suggesting at least a 3-wave correction (green labels/path), or possibly five waves down in a more bearish pattern (red labels/path).

·         Even under a green, long-term bullish pattern, it could reach the 400 area to close the open gaps, before running to new highs.

·         There is an open gap above, which MU might attempt to close in red 2 or green B.

·         Under the red Elliott wave count, 5 waves down for (1) may hit th

SOX Time Cycles

• The three dominant cycles nailed the SOX top and indicate a cycle trough in early September.