Small Cap Rotation & Ethereum Breakout: Why This Market Just Got Interesting
After months of large-cap domination, we’re finally seeing signs of small cap rotation. The IWM broke out with force over the past two sessions, logging back-to-back 2%+ days. When you combine that with the breakout in Ethereum—yes, that ETH—the message is clear: risk appetite is back.
But it’s not just about the IWM or Ethereum.
We're seeing early signals that speculative capital is flowing into beaten-down names, small caps, and crypto-related assets. This rotation could present explosive opportunities for day traders and swing traders alike.
Why Small Cap Rotation Matters
For months, traders were glued to names like NVDA and TSLA. But those tickers took a backseat today. While large caps like Netflix, Oracle, and Palantir showed weakness, the small and mid-caps lit up.
The IWM broke out of a multi-month range, suggesting a major shift. These moves aren’t just intraday noise—they’re structural signals. Breadth is improving, and that’s bullish.
Ethereum’s Monster Run
One of the biggest stories this month is Ethereum’s breakout. With Bitcoin already running on the back of ETF optimism and political chatter, ETH has now joined the party. Some traders point to the Trump campaign embracing stablecoins or Tom Lee’s bullish Bitcoin treasury ideas. Either way, Ethereum is outperforming for the first time in years.
It’s overbought now—but on the next pullback, it could be a huge opportunity. If you’re a crypto trader, don’t sleep on this rotation.
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Key Trade Ideas for Tomorrow
These names are setting up with ideal patterns:
- OUST: Flat top breakout after earnings reversal. Could be a prime day trade.
- CHWY: Strong volume surge + breakout. Watch for continuation.
- AEO: Multiple tests at the 200-day MA. Breakout over 14 could get spicy.
- Rgti: Earnings name with massive volume (92M+). Watching for follow-through.
- PLTR: Weakness today, but on a red-to-green reversal, it’s still in play. But my preference is to just stock with big momo's in the mid and smallcap space
- Ethereum (ETH): Too extended to chase now, but worth watching for a blow-off top and fade.
- SHOP / MU / AMD: Resting at highs—on dips only.
- BMNR: Avoid dead money setups. Focus on the hot hands.
We’re also seeing movement in Chinese stocks, beaten-down names with heavy float, and crypto-related equities like COIN. BABA & BILI looks decent for swings
Final Word: This Is the Moment to Grind
We’re in a rare market phase. Breadth is expanding, rotation is real, and volatility is rising. That’s a cocktail for momentum traders.
These are the days you want to be alert, present, and on your A-game. Don’t coast through summer—capitalize on it.
If you’re not already in the Boom Boom Room, now’s the time.
A good pattern to practice on all these would be the first pullback pattern. It is clean and easy to find daily so you.
Strategy Insight: Use Earnings Season to Your Advantage
Earnings breakouts are trending harder and cleaner than most momentum names right now. REAL, MERC, and AQST are all evidence of that. Run your scans in the morning for fresh earnings movers and look to trade the first dip if the tape confirms strength.
If you have some free time check out these 40 trading lessons that I have learned in my career! Just one of these could make a huge impact.
💥 P.S. Want to Trade Like a Pro?
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About the Author:Kunal Desai is the founder of Bulls on Wall Street and one of the most experienced trading mentors in the world. With over two decades of experience and 7,000+ students trained, his mission is simple: teach traders how to build real skills, not hype. You can find him trading live inside his Bootcamp daily.
