Holiday Update for Stock Market’s “Economic Modern Family”

Michele Schneider

Perhaps you are with family this weekend.

Hopefully, that is a harmonious experience for you.

However, some families are decidedly disharmonious, especially when we look at the stock market.

For example, the Economic Modern Family of stock market ETFs are squabbling this weekend.

With a clear lack of unity, the fights among the members concern who is right (the strong or the weak)

If most of us charted our family differences, they might look like the divergences we are seeing on the weekly charts of these economically sensitive ETFs (Modern Family).

Rarely have I seen such variation among sectors-from new all-time high bullish patterns, to ominously bearish ones.

So which ETFs are right? Let’s look at the charts and discuss.

stock market etfs economy sensitive investing analysis news april 19

Top left is the Regional Banks ETF (KRE). Our Prodigal Son, during the Easter weekend is basically agnostic.

In between exponential and simple moving averages, KRE is in a can-go-either-way setup.

Then we have the Transportation Sector ETF (IYT). Low volume (the only chart with voume shown), it nonetheless sits as one of the leaders in a bullish phase. That should be enough to keep the market positive, but we do want the others to cooperate soon.

Which brings us to the Russell 2000 ETF (IWM). After two weeks above the 50 week moving average (blue line), last week, it failed to hold it. Plus, it traded back below the 200-Daily moving average.

The good news? IWM (also agnostic) is salvageable if it can clear last week’s highs.

On the bottom we begin with another family agnostic-Granny Retail XRT. 

XRT trades inbetween the major moving averages just as KRE is doing. 

We will be watching carefully to see if KRE and XRT can find religion again. That would mean they move higher and closer to their 50-WMAs.

The Semiconductors ETF (SMH), made a new all-time high last week. On Thursday, it had an inside day.

That makes one of three scenarios likely. 

SMH can go from a breakaway gap to an island top if it gaps below 116.89 and does not clear that level. 

It can also gap higher leaving a second breakaway gap. Or, it can chop around above 116.

The far right is Biotechnology Sector ETF (IBB). Poor big brother. He had a rough week. By the end of the session on Thursday though, IBB managed to hold onto the 200-WMA (green line).

Next week will be all about finding some level of harmony among the sectors.

Should IBB fall further, it will take XRT, IWM, KRE (market agnostic sectors) heading more towards market atheist.

If SMH gaps lower leaving an island top, the hesitant sectors will fall much harder. We can say the same about IYT-that must hold up as well.

S&P 500 (SPY) – Swing high at 291.42 with all-time high 293.94. 289 immediate support. 

Russell 2000 (IWM) – 154.85 the 50 DMA to hold. 156.12 the 200 DMA and 157.35 the 50-WMA.

Dow Jones Industrials (DIA) – Swing high at 265.93. That means must hold 263.50 

Nasdaq (QQQ) – New all-time high at 187.93. 185.75 now the support to hold.

KRE (Regional Banks) – Has to clear 55.35 and hold 54.00 

SMH (Semiconductors) – Inside day after an all-time high at 118.83. What you do not want to see is a gap below 116.89, that does not get filled.

IYT (Transportation) – New Swing high at 198.65. December 2018 high 199.09. 197 support to hold and then 194.50

IBB (Biotechnology) – 103.78 the 200-WMA to hold.

XRT (Retail) – 45.50 pivotal to clear and 44.40 the support it must hold.

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