ETF Investing Market Update: Is It Time to Prune in June?

Michele Schneider

Now that “sell in May” did not work out so good for the bears, what will June hold for both the bulls and the bears?

Since the price lows that were established in late March, it’s been easy pickings for so many areas of the stock market.

For the Economic Modern Family (of ETFs – my go to for analysis), money has fallen off the trees.

However, many sectors are still markedly down on the year… while the NASDAQ gets closer to making new all-time highs.

Typically, trees mature in June and yield fruit late into the summer season.

This tree though, yielded fruit unseasonably early.

Beyond the leaves, we see some dead branches. 

money falls from tree image_ michele schneider

Is it time to prune them in June?

Looking at the weekly charts at the beginning of the month, will hopefully help us consider next steps. See chart below.

Top left is Granny Retail XRT. She sits right on the 50-WMA (blue line). 40.00 is key support, but under 38.00 her money stops falling from the tree.

Middle top is Granddad Russell IWM. 140 is pivotal. But more importantly is the support at 136. That must hold. With IWM down 15-16% this year, he also needs to clear back over 148.50

Top right Biotechnology IBB, is consolidating. Neither gathering more cash nor losing it, 136 is a big area to clear.

Bottom left is Regional Banks KRE. Most worrisome, he needs to get back over 40.00 and hold above 35.00. He is often the first to signal that pruning is required.

Middle bottom is Transportation IYT. The black line or around 156 is the root for him. IYT is another massive underperformer. If he loses that root, a lot of the tree will be in danger.

Bottom right is Sister Semiconductors SMH. She still has a gap from the week it collapsed to fill at 144.96. Plus, in good shape, she must hold above 134.00

When you look at them all together, the divergence between the economy and the market flyers is most apparent.

If this rally has sustenance and can keep the family tree thriving in cash, then this is the week we must see that happen.

S&P 500 (SPY) 300 support 313 resistance

Russell 2000 (IWM) 140 is pivotal. But more importantly is the support at 136.

Dow Jones Industrials (DIA) 263 resistance with 250 support

Nasdaq (QQQ) Looks like all-time highs are in the cards (237.47)

KRE (Regional Banks) 40 pivotal 35 key support

SMH (Semiconductors) 137.50 support-still has gap to 144.96

IYT (Transportation) 156 support 163 next resistance

IBB (Biotechnology) Until it takes out 136 noise

XRT (Retail) Holding the 200-DMA

Volatility Index (VXX) Inside day-consolidation range

Twitter: @marketminute

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