Cactus Wrens have no fear. They are big and bold. They perch and nest in cacti. They announce their presence strutting and fanning their feathers. This nestling sits in its cactus nest, clearly feeling right at home. Nature provides an apropos metaphor for the market.

The Market

An environment that prefers to strut and fan. An environment that gives birth to thorny controversy after thorny controversy. An environment that thrives in thorns.

Last week, we carefully watched the Modern Family for clues to the market’s next direction.

With July’s kick-off, will the Modern Family impersonate the cactus wren and thrive among the thorns?

The Russell 2000 closed the month out above 140.

With the top of the channel resistance at 142.90 nearing, IWM’s strength most likely means the market likes its big and bold status.

Transportation (IYT) fanned its feathers. An extremely healthy close for the month, IYT proves that like the cactus wren, it requires very little water to sustain.

Semiconductors (SMH) confirmed the Warning Phase. Yet after a 10% correction, Semi’s just need to hold 80.00.

Even if SMH doesn’t rally much from here, the rotation to small caps and transportation is healthy.

Biotechnology (IBB) held 310 and ended the month with a quiet inside day. Speculators who bought over 300, most likely took the day off to enjoy the view from that perch.

Regional Banks (KRE) also had a quiet inside trading day. Over 56.00 though, that chart begins to convince us that the rally is real.

Under 54.00, we look to see if the baby wren fell from its nest.

Granny Retail (XRT) wows me the most. While falling out of favor for the first half of 2017, she now looks nourished.

Confirming a V-bottom (a technical signal which indicates a dramatic move lower followed by initial bargain hunters buying), could be this summer’s cactus flower. Male cactus wrens build “dummy” nests to fool potential predators away from their babies.