The small-cap Russell 2000 index (IWM) cannot make up its mind.
For the past three trading days, IWM has not been able to clear a pivotal resistance area created from the 50-Day moving average at $225.
Other key sectors including Transportation (IYT) and Retail (XRT) have also been under pressure, and like IWM are struggling to hold their current price levels.
With that said, there is one sector that could be taking the lead after months of choppy price action.
The outlying sector is semiconductors (SMH), which has taken the lead to new all-time highs. Initially semiconductor companies lost demand as the country shut down from the pandemic. Then, as people went from office to home setups and children shifted from schools to home, the need for computers, game consoles, and general tech increased.
On top of that, car manufacturing companies, which are huge consumers of semiconductors, began selling more cars due to cheap money flooding the economy. Soon, supply chain bottlenecks were reached because its much easier to slow down production than it is to speed back up.
Having said that, if SMH has underlying strength it will need to hold over its breakout area $262. If not, we could be in a very choppy market environment that could take more time to play out.
We can also watch large companies like Advanced Micro Devices (NASDAQ:AMD), Nvidia (NASDAQ:NVDA), and Intel (NASDAQ:INTC) that require computer chips to ramp up their supply of hardware as semi producers re-adjust to incoming demand.
ETF Summary
- S&P 500 (SPY) Needs to hold over 435.
- Russell 2000 (IWM) 225 resistance.
- Dow (DIA) 351 resistance area.
- NASDAQ (QQQ) 360 support.
- KRE (Regional Banks) 60.20 support the 200-DMA.
- SMH (Semiconductors) Watching to hold over 262 area.
- IYT (Transportation) 253.80 resistance from the 10-DMA.
- IBB (Biotechnology) Holding upward trend. Needs to stay over 163.63.
- XRT (Retail) Support 93.79. Looking very choppy and beginning to trade more sideways.
- Junk Bonds (JNK) Broke support at 109.46.
- IYR (Real Estate) Showing resistance near highs. 105.22 support area.
- (XLP (Consumer Staples) 71.69 resistance zone.
- GLD (GoldTrust) Needs to stay over the 10-DMA at 169.23.
- SLV (Silver) 23.99 next resistance level to clear. Watching to hold the gap from 23.18.
- XME (S&P Metals and Mining) 43.95 support.
- USO (US Oil Fund) Bounced off the 50-DMA at 48.48.
- TLT (iShares 20+ Year Treasuries) Holding over its 10-DMA 149.25.
- USD (Dollar) 91.56 50-DMA to hold. Needs to hold over 92.
- DBA (Agriculture) 18.46 the 50-DMA with more support the 18.07.