Title:   Haymaker Daily — Rotation, Not Correction (KRE breakout, cumulative A/D at new highs, XLE)
Show:    Haymaker Daily (Substack) — paid
Guest:   David Hay (Haymaker; co-founder/ex-CIO Evergreen Gavekal)
Date:    2026-JUL-07
URL:     https://haymaker.substack.com/p/haymaker-daily-d8c
Length:  written post (no timestamps)
Note:    Paid written post, verbatim text. A short technical/breadth Daily. The three referenced Bloomberg charts (KRE 5-yr, S&P 500 cumulative A/D 25-yr, XLE 25-yr) were not captured; text ends at the XLE chart caption. Body reproduced for personal study.

Hello, Haymakers:

Numerous Haymaker Dailies have cited the various concerning aspects of recent U.S. stock market technical and fundamental behavior. However, there are several important features that indicate a major rotation is more probable than a significant correction.

One of those encouraging indicators is the multi-year breakout by the regional bank index, KRE. As you can see from the following chart, it is also not far from breaking above five-year resistance. If it does, by penetrating above 80, this would represent a new all-time high, an even more positive development.

Five-Year Price Chart of KRE (with overhead resistance displayed)

[Bloomberg chart]

Another encouraging aspect of current equity market conditions is that the cumulative advance / decline line continues to attain fresh peaks. This is in contrast to early 2008 and early 2022 when both KRE and the cumulative advance / decline were turning down even as the stock market was close to all-time highs.

25-Year Price Chart of the S&P 500 Cumulative Advance / Decline Line

[Bloomberg chart]

Similarly, small-cap stocks are additionally notching new highs. This is also the case with the S&P equally weighted index. If these signals are correct, it may behoove investors to be searching for those sectors which have pulled back after achieving a clear upside range expansion but remain in long-term uptrends. One that qualifies is Haymaker favorite XLE, the ETF of leading energy enterprises.

25-Year Price Chart of XLE (with overhead resistance displayed)

[Bloomberg chart]