US financials could lead the market into year-end if the Fed signals at the upcoming FOMC that rates will stay higher for longer, as expected. The financial sector is breaking out on the weekly chart, and banks such as JPMorgan, Goldman Sachs, Morgan Stanley and Bank of America are quietly reclaiming trend and pushing toward new highs. x.com 

Banks and XLF look to have bottomed this past week, supporting a local bottom in US small caps. Stockspy1 noted that the Russell 2000 includes many regional banks, linking the banking-sector turn to IWM. x.com 

Bank earnings season may mark peak earnings for financials, opening a path for the Financial Select Sector SPDR Fund to retest its 4Q21 peak near $40. Cycle indicators turned in 4Q25, when the 3-month Treasury yield broke its monthly 50-period moving average, so the market should start treating current earnings as a peak. The fund peaked in January 2026 and has dropped below its monthly 20-period average, opening a retest of the 50-period average. Whether it plays out remains to be seen. x.com 

Small caps have the best chart of the three major US indexes, and money is flowing into the financials and biotech names the Russell 2000 is full of. The position was started on the post-FOMC flush and will be managed against the 9-day EMA, with the risk of exiting if Fed chair Warsh's press conference goes the wrong way. x.com 

The US large-cap correction isn't over until interest rates top and bonds bottom, which hasn't happened yet. The summer 2023 S&P 500 correction ended right when bonds bottomed in October, with TLT trading massive upside volume, and there is no sign of that now. Higher rates keep pressuring real estate, where lots of money has been trapped since 2022, a possible source of downside dislocation, and an aggressive further rise in rates could bring a panic bottom. x.com  x.com  x.com  x.com  x.com  x.com 

Small caps, utilities and regional banks look set for an oversold catch-up rebound as market breadth improves in early October. The broad market should make new highs led by semiconductors and big tech, with small caps and sectors previously held down by rates catching up. x.com  x.com 

Semiconductor hardware leaders are correcting in Q3 because of mechanical rebalancing, not a fundamental collapse. After H1 2026 gains such as Micron's 301% and Intel's 257%, index funds, target-date portfolios and risk-capped active managers must trim winners and buy laggards. With passive funds over 55% of US fund assets and the top 10 S&P 500 stocks about 35% of the index, even a 2-3% trim in a few giant chip names frees tens of billions to rotate into mid-cap, value and cyclical stocks. … Show more

The S&P 500 is likely in its final Elliott Wave 5, one more push to all-time highs where everyone turns bullish and smart money sells. Breadth keeps deteriorating, momentum is fading, fewer stocks drive the rally, and valuations sit near extremes while investors price in lower inflation and Fed easing; if those disappoint, the breakout could turn into distribution. Euphoria could peak around 7,800, after which a move back toward the April lows near 6,300 becomes a real possibility. x.com