Fierce rotation gripping market: Trader

There's a key trend that may be taking over the markets, and it could have a big impact on your portfolio.

"We've seen a fierce rotation out of utilities and staples and and into stuff like materials and energy and financials. And, you know what? There is also a little bit of a rotation out of bonds," Robert W. Baird's Michael Antonelli said Tuesday on CNBC's "Futures Now." "There is just this slow bleed out of them right now, and that's just a part of this risk allocation."

Antonelli, who sees the Fed maintaining a dovish tone in its decision on interest rates on Wednesday afternoon, is focused more on the latest quarterly earnings reports.

"They're (companies) jumping over a broomstick right now. I mean look at financials — anything they did, they ended up going up on the day. All you had to do is report anything at all and you were going to go up. Estimates have been lowered so much," said Antonelli, who believes investors will see multiple expansion stall.

He's predicting investors will see the fourth quarter in a row of negative earnings growth, even though a lot of companies have been beating those lowered Wall Street estimates.

But the picture could change quickly if this one major area of the market grabs more gains.

The Russell 2000 Index, which is up about 2 percent this year, could be the major catalyst behind a feel-good environment, according to Antonelli, Baird's managing director of institutional trading.

"You want to see that it's not just the that's being bought," he said. "When the Russell 2000 comes up and says, 'Hey, I'm with you guys, let's go,' then you start to feel better about the markets."