The S&P 500 and DJIA continue to move higher in large part due to Apple (AAPL) . Breadth is running about 4-3 positive but small caps (IWM) are lagging again. Small caps topped on December 27 and have been underperforming since then.
One of the sectors that did particularly well recently due to small cap strength is biotechnology. Currently, the biotechnology index (IBB) is lagging the indices with a loss of about 1.1%
Apple continues to be the primary reason the indices are trending higher. It has a market cap of about $1.387 trillion. That is the equivalent market cap of about 85% of all 2000 stocks in the Russell 2000 small-cap indices. In other words, Apple offsets a very large amount of weakness in the broad market.
Weakness in small caps worries some bulls as they feel it signals that problems may start to spread to the broader market. Maybe, although bit caps and small caps can stay uncorrelated for very long periods of time.
My approach to this sort of action is to forget the indices and focus on managing your individual positions. If you have small caps that are struggling and breaking support then sell them. The fact that that Apple and the S&P 500 are holding up is not relevant.
Rotational action is taking place and that may be how the market finally undergoes much needed corrective action. Manage your positions closely and you'll be in good shape.