Tech and Small Caps Dominating Momentum Rankings

by Roger Scott | May 12, 2026

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I’ve been digging into the momentum rankings coming into this week, and what I’m seeing tells a very specific story about where the market’s strength is concentrated right now.

Semiconductors, technology, the Nasdaq 100 (QQQ), biotech, Bitcoin (BTC), the Russell 2000 and consumer stocks are leading the charge over the last five days.

It’s all speculative. Very, very speculative.

Speculative leadership is typically bullish because it shows traders are willing to take risk. That’s part of why you’re seeing such a sizable discrepancy between large caps and small caps — the Russell 2000 is running, but it’s running because speculation is running.

Strip out technology, which has been up more than 50% on earnings, and you’re left with a market that looks far weaker than the headlines imply.

Market internals confirm that weakness. Only about 53% of the Russell 1000 is trading above the 200‑day line. Nearly 47% of the S&P 500 (SPY) is below its own 200‑day.

That’s not the foundation of a broad, sustainable rally — it’s narrow leadership pulling a heavy market behind it. Look at an equal‑weighted (RSP) view of the S&P 500 and you can see why this market has been called a hollow rally.

The Leadership Pattern Raises Questions

When you look at the graph of leading sectors, tech and speculative names are ahead by a wide margin. That’s great for momentum traders, but you have to ask whether it can carry into this week. This isn’t about pessimism — it’s about understanding what’s driving the move.

The gains are real, but they’re concentrated in the most aggressive parts of the market. That’s fine until traders overextend. And right now, call buyers are doing exactly that. Options activity shows too many traders leaning heavily bullish, and when call buyers get ahead of themselves, markets often react in the opposite direction.

The macro backdrop adds even more fragility. Elevated crude oil prices raise the risk that the economy hits recessionary conditions within months. Combine that with geopolitical uncertainty, and it doesn’t take much for sentiment to shift away from speculative assets.

The result is a market that looks like a car flying down the highway at 200 miles per hour while multiple warning lights flash on the dashboard. It can keep going for a while, but that doesn’t mean you ignore the signals.

What This Means for Your Trading

If you’ve been trading semiconductors, biotech, small caps or other speculative leaders, the recent run has probably treated you well. But don’t confuse recent momentum with guaranteed continuation. When rallies rely on narrow speculative leadership, reversals can come fast.

Watch whether this leadership broadens out or fades. If speculative names lose steam and other sectors fail to rotate higher, that’s your biggest warning sign. A hedge isn’t a bad idea here, and longer‑dated VIX calls can help buffer against the volatility spike that’s increasingly likely over the next several months.

For now, the trend is what it is — speculative sectors are leading. Just stay aware of what’s beneath the surface because, as of now, it’s an extremely vulnerable market. Please, please be careful today.

I hope that helps!

Roger Scott
Roger Scott Trading

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