Over the weekend I covered small caps, retail, semiconductors, and transportation.
The conclusion was:
“If you put these four charts all together, we get a reunion that is filled with the makings of a family breakdown.
While Granny XRT and Sister Semiconductors SMH give us investors reasons to feel good about gorging ourselves, the rest of the Family (IWM IYT) remind us not to eat what we cannot digest.”
Today, we cover 2 other sectors of the Economic Modern Family.
KRE or Regional Banks rallied right into resistance.
They are performing on par with the SPY.
Momentum shows a bullish divergence but with the possibility of a mean reversion.
Most importantly, KRE has recovered from the March lows, but has not really gone anywhere compared to other sectors and stocks that have made new all-time highs.
Talk about a family breakdown. KRE scared investors a few months ago. Now, some talk about commercial real estate and bank defaults going forward. And most believe that the FED will add the necessary liquidity. Or, if we do have a recession, easing monetary policy will help the banking sector.
We believe perhaps a sea change-this banking as we have always known it is changing to the crypto landscape.
Regardless, KRE must clear the 200-DMA and July 6-month calendar range to continue its ascent. A break under 40.00 would be a warning sign.
Over the weekend we say that IYT remains in a downtrend, under the July 6-month calendar range low.
Momentum is in a bearish divergence to price as it has yet to clear its 200-DMA while price has.
Is IYT more inclined to lead or follow from here?
That is a big question and one that we should watch for the answer to so we can assess if this rally is sustainable.
And Sister Semiconductors SMH in a bullish phase shows momentum in a bearish divergence.
Nonetheless, Biotechnology IBB has been the worst sector of the Family.
IBB remains in a bearish phase, well under the July 6-month calendar range low.
It is underperforming the SPY.
One bright spot though, is the Real Motion indicator or momentum shows a move over the 50-DMA or a bullish divergence.
Two closes in price over the 50-DMA and it is possible IBB runs back up to resistance around 124.
IBB is ripe with picks, some of which I have covered in the media in the last 2 weeks. Others I will discuss this week in the media.
ETF Summary
- S&P 500 (SPY) 450 support 465 resistance
- Russell 2000 (IWM) 181 resistance 174 support
- Dow (DIA) 360 resistance 346 support
- Nasdaq (QQQ) 388 now pivotal support
- Regional banks (KRE) 45 big resistance
- Semiconductors (SMH) 160-161 pivotal support
- Transportation (IYT) 235 support
- Biotechnology (IBB) 120 pivotal
- Retail (XRT) 65 resistance and 60 pivotal support