Stock Market ETFs Trading Update: Sector Rotation Continues

Michele Schneider

Sector rotation continued across the stock market and financial markets on Tuesday.

The Retail Sector ETF (XRT) is still top carrot (or the green sprout.)

The Regional Banks ETF (KRE) came in second with the Transportation Sector (IYT) third.

The Russell 2000 (IWM) cleared its key moving averages. 

And the Semiconductors Sector (SMH) saw more selling. 

Bond yields also rose again.

And the Biotechnology Sector (IBB), now slightly above the 200-WMA yet, at least saw more buying today.

Value stocks have been the big winners.

It’s fun to catch the value stocks, but sometimes, when growth stocks get hit and the money turns to the cheaper value stocks, that could turn out a cautionary tale.

With the ratio between growth and value at a 7-year low, buying value makes sense for now.

However, for a sustained comeback, we need to see more evidence of a reaccelerating of global growth, or a full-blow recession that forces a repricing of growth stocks.

Let’s look at the key levels so you are prepared for tomorrow.

S&P 500 (SPY)  300 will be the resistance with ATH 302.23. Support at 296.64 ultimately held after initial selling. Still looks good on the daily chart. 

Russell 2000 (IWM) The 200 DMA and 50-WMA at 152.15 cleared and this went into an unconfirmed bullish phase. We need a second close over 152.02. And over today’s highs next resistance is at 155.

Dow Jones Industrials (DIA) 265.86 is the 50-DMA which is now the number to hold. 270 area resistance to clear.

Nasdaq (QQQ) 189.15 the 50-DMA was tested and held. Thru 190.55 should continue the rally with the highs at 195.55

KRE (Regional Banks)  If this holds 52.60-now that it is over the 50-WMA at 53.01, we need to see more other than a rally into resistance.

SMH (Semiconductors)  118.00 area is the support to hold so the gap remains. Resistance 121.43 then ATH 123.56

IYT (Transportation) 189 support. 192.57 some resistance and then around 194.

IBB (Biotechnology) The 200 WMA at 102.65 now super pivotal.

XRT (Retail) Unconfirmed accumulation phase. 43.12 now the pivotal number to hold. And perhaps, if this cannot clear 44.00 and starts to turn down, rally over.

Twitter: @marketminute

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