Stock Market Top? If Weaker Sectors Stall at Resistance

economic sensitive stock market etfs investing analysis news image may 4

A while back I stated that by the time the Regional Banks ETF (KRE), Retail Sector ETF (XRT) and the Russell 2000 ETF (IWM) reach their 50-week moving averages (blue line), a stock market top is near.

As of Friday’s close, KRE came within spitting distance of its 50-week moving average (WMA).

XRT has another dollar to run til it gets there (if it gets there).

And the Russell 2000 – Granddad – for the 7th time, pierced and closed above its 50-WMA.

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Are we near a stock market top?

Before I took a break to promote my book, we were looking for unity in the modern economic family of ETFs.

With Semiconductor stocks flying and Transportation trying, we needed to see the others play catch up.

Interestingly, the Semiconductors Sector ETF (SMH) had an inside week. No new highs there.

The Transportation Sector ETF (IYT) bounced from a retest of its 50-WMA, but also did not get close to the week before’s highs.

That means that the run in IWM is impressive.

Yet not enough at this point to spur XRT and the Biotechnology Sector ETF (IBB), our weakest link, into weekly bullish phases.

This week watch for IWM to continue to lead. We need to see KRE hold its gains and clear the 50-WMA.

IBB must continue its journey north. And XRT, must also head closer to the 50-WMA.

That’s a lot of froth the market needs in order to keep the bulls sustained.

Othewise, my prediction that once KRE and XRT reach their 50-WMAs, a stock market top could be in, well, keep that in mind before you continue to buy the highs.

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Here’s a recap of the ETFs that we follow:

S&P 500 (SPY) – All-time high 294.95. Has to clear or could see another test of 290. 

Russell 2000 (IWM) – New swing high made at 160.64. 157.15 support that must hold and 162.74 the October high next resistance. 

Dow Jones Industrials (DIA) – 269.28 all-time high. Must clear Friday’s high at least 265.25 and hold 261. 

Nasdaq (QQQ) – New all-time high at 191.32. 189.80 big support for this to hold

KRE (Regional Banks) – 55.90 the 200 DMA as support with 57 significant resistance. 

SMH (Semiconductors) – All-time high at 120.71. With an inside week, must hold 113.49

IYT (Transportation) – 198.50 resistance from the day it broke hard and has to clear that plus held around 195. 

IBB (Biotechnology) – Has resistance at 108 109, 11. So we need to see a lot of refresh buying. Critical support at 106.50

XRT (Retail) – 45.15 the closest pivotal support area with a way to go to the 50-WMA at 46.90.

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.