After the market has a big move like the one the election just created, the next step is for it to be tested with a correction or pause.

This test begins to reveal which sectors or stocks or asset classes will be the next winners or losers.

The test of the Trump rally began last Monday, Nov. 28th, and in yesterday’s commentary I reviewed one way to use the Inside Day pattern to benchmark the progress of a market reversal.

Today the market followed through on that reversal, and we learned that the Trump rally market rotation remains in full force. The new market leaders demonstrated their strength again.

It’s often hard to believe that the strongest areas will continue to get stronger when other areas of the market seem to offer a better value as viewed by their lower price, but most of the time the markets are no different than the common phase, “the rich get richer…”

Fortunately for the astute trader or active investor, the market does rotate which sectors will enjoy the leadership roles, and right now we’re seeing that rotation play out.

Rotation is good because provides new life to a bull market and new trades in mega trends for the traders who know how to catch them.

If we focus on Mish’s Modern family, the most important news of the day is that IWM broke out to new highs with the support of its new partners in leadership IYT and KRE. This is a good sign for the longer term prospects of this rotation.

Furthermore the pre-election all star, SMH, continued to recover from the beating it took during its test. This is also bullish, but unfortunately , the same can be said for the QQQ.

Keep your eye on the QQQ (important levels are noted below). It does not need breakout to new highs for this market to go higher, but if it breaks down it will be a problem.

Additionally, the consumer as measured by Retail or XRTr, continued to bounce back with a nice strong day today. It’s not back over its Nov. 25th highs, but it’s acting like a leader. Keep a close eye on XRT, it’s sitting on a full year of basing action that could turn it into a big year-end bonus for the Bulls.

S&P 500 (SPY) 6 of the last 8 day’s highs fall between the all time high of 221.83 and 221.40, and today’s close is right in the middle. Watch for this to control the trend’s next move.

Russell 2000 (IWM) The bulls are relentless here, but the other indexes didn’t follow suit. Look for support around 134 and 133.20

Dow (DIA) Still showing signs of strength, but it’s choppy ride higher. 191.40 is the area to look for the ‘dip’.

Nasdaq (QQQ) 2 cents prevented it from being an official inside day, but that doesn’t take away from the significance of the last two days of tighter consolidation than the daily chart suggests. It’s set for a big trend day in either direction. The bears could show up with force under 116.20.

KRE (Regional Banks) Amazing.

SMH (Semiconductors) Closed right at an important resistance level,70.20. Be careful if it breaks 69.50. Significant resistance at 71.

IYT (Transportation) Today’s low area (162.80) is the support for when it consolidates.

IBB (Biotechnology) Needs to break and stay over 275 for a day or two before it will look like the correction is over. Under 270 it’s in trouble and 267.60 is a must hold level.

XRT (Retail) Showed off some good relative strength in the morning before leading the market higher. If it can stay over 46.50 this may surprise investors to the upside into year end.

GLD (Gold Trust) Inside day at an interesting level. Over 112.40 it may start to bounce.

GDX (Gold Miners) Consolidation continues. Key levels to break are over 22 and under 20, otherwise it’s just waiting.

USO (US Oil Fund) Consolidating under the 11.50 major level?

TLT (iShares 20+ Year Treasuries) Inside day could push it either way, but it really needs to get over 120.40 to look like it may have a bounce in it.

UUP (Dollar Bull) Correction time unless clears 26.34. 25.80 in focus