The Mag 7 had a down month. That’s not the warning it looks like.

July monthly charts: small caps at all-time monthly closing highs, financials and healthcare breaking out. The theme is rotation.

Once a month I zoom out to the monthly charts. Day trader, swing trader, systematic, doesn’t matter. It’s the forest instead of the trees, and it’s kind of cathartic after staring at every tick.

Here’s what jumped out. The Qs had a down month. Not dramatic, but down. Same for SPY. Meanwhile small caps made a new all-time monthly closing high, and RSP, the same S&P names just equally weighted, outperformed. The hundred largest tech stocks underperformed the ma-and-pa companies.

Now the tell. QQQ versus QQQJ, the next 100 names after the giants. QQQJ had a green month. Barely, but green. So this isn’t tech versus value. It’s the mega conglomerates versus everything else.

Under the hood it’s the same story. Healthcare briefly broke an all-time high last month. Financials printed a huge bullish engulfing month and got continuation. Nvidia gapped up and sold off most of the month.

None of this is scary to me. It’s a broadening out. The market is going from seven stocks propelling everything higher to profit-taking in those seven and buying everything else. If you only trade those seven names, sure, worrisome. Zoom out and the trend is consistent: the bull market isn’t reversing, it’s spreading.

One side note: Ethereum is back at the 12 to $1,400 zone where it’s bounced before. Worth a look.

Upgrade to Stats Edge Pro at $149.99/month, 30-day money-back guarantee.

— Michael Nauss, CMT, CAIA, CDMS