6-Month Calendar Range (Part II): August Doldrums

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Today we will continue to look at the reset of the July 6-month calendar ranges across 4 of the Economic Modern Family Sectors (trading ETFs).

To remind you, the range is good until the next time it resets in January 2024.

Beginning with the Transportation Sector ETF (ticker: IYT), last Friday it began to slip below the green horizontal line or 6-month calendar range high (CRH).

However, IYT is in a bullish phase far from its 50-DMA t 248.

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Momentum as measured by our Real Motion indicator has a slight bearish momentum diversion with momentum on its 50-DMA.

The 6-month calendar range low is 245.84. With IYT’s topping candle late July, a move to test the CRL would be about a 10% correction.

Moving on to the Semiconductors Sector ETF (ticker: SMH), even worse than the Nasdaq 100 ETF (ticker: QQQ), SMH never cleared its 6-month CRH and has retreated with today’s move testing the 50-DMA.

Momentum broke the Bollinger band. If SMH is to hold, the low 151.50 up to the 50-DMA at 152.30 should hold and we will look for a potential mean reversion.

If SMH cannot hold these levels, the 6-month CRL is at 147.00. Under there, expect a much deeper correction.

Thus far, a 5-10% correction considering how frothy the levels were becoming is expected and normal.

Plus, all our risk factors continue to point to risk on.

Regional Banks KRE hit the news today with Moody’s downgrade on a few banks.

KRE CLEARED its 6-month CRH and even with today’s downgrade, consolidates at higher levels. 

That makes 44.40 the key support. Plus, although the momentum is declining, that price retook 48.00 during today’s action can be considered healthy.

Perhaps this was a “buy the downgrade” news scenario.

As for Biotechnology IBB, momentum is back on the upswing.

As the price is under both the 50-DMA and the 6-month CRH, we see potential here for a move higher.

The levels are clear-128.30 for a phase change to recuperation, then a move over the 6-month CRH or 130.36, and we would be looking more closely at that sector.

We find it fascinating that the ONLY sector in the economic modern family above the July range is Regional Banks. 

Is that relaxing or frightening?

Twitter: @marketminute

The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.