The stock market had a mixed month in July. The S&P 500 continued on its breakneck pace for the first part of the month, setting yet another all-time high. But it started to falter mid-month, giving back all of its gains for July at one point.

As investors sold out of stocks in the S&P 500, it was clear where they were putting their money. Small-cap stocks soared amid the drop in the S&P 500 in what the media is calling "the great rotation." The SPDR Portfolio S&P 600 Small Cap ETF (NYSEMKT: SPSM) climbed 10.8% in July while the SPDR S&P 500 ETF (NYSEMKT: SPY) finished the month just 1.2% higher.

There are good reasons to expect small caps to continue outperforming large-cap stocks for some time. Two important market indicators suggest this may be just the start of the rally in the S&P 600.

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Source Fool.com