Recently, we talked about Transportation (IYT) and Retail (XRT) sectors as indicators for market strength/weakness. Transportation shows the movement of goods and travel expectations, while retail shows the consumer sentiment side. Both help us understand investor expectations of the economy reopening and therefore help us understand if we are in a risk on/off environment. The strength has clearly been noted, with IYT breaking to new highs and XRT sitting close to all-time highs at $99.
Most of the indices have picked up on these clues too, with 3 of the 4 major indices breaking to new highs this past week. However, the Nasdaq 100 (QQQ) tested its 50-day moving average but was unable to clear its resistance level at $320.39. Additionally, the S&P 500 (SPY) was able to break all-time highs but could not hold them. This means that, on Monday, we should watch for follow-through from these 2 indices, as this could be a short-term pivotal area to clear.
While the market continues to push a bullish bias, one thing that has jolted investors is the 10-year treasury yield increasing over 1.60%. If yields continue to move higher, this could lead investors to worry about rising inflation.
Luckily, we have a special ETF that helps gauge investors risk appetite: the yield corporate bonds ETF (JNK). Currently, it has been consolidating underneath resistance from the 50-DMA at $108.29. If investors get spooked, watch for this to break down. Conversely, if JNK clears its 50-DMA and holds, the market, along with investors, should be appeased for the moment.
In the Friday edition of StockCharts TV's Your Daily Five, as Nasdaq underperforms the other major indexes, Mish takes a look at the top 10 strength names in the Nasdaq 100.
- S&P 500 (SPY): Prior high 394.17
- Russell 2000 (IWM): All-time highs
- Dow (DIA): New Highs. 320 new support
- Nasdaq (QQQ): Main resistance 320 the 50-DMA
- KRE (Regional Banks): New highs
- SMH (Semiconductors): 216 support. 236 resistance
- IYT (Transportation): New highs
- IBB (Biotechnology): trading in middle of range of 50-DMA at 200-DMA. Held the 10-DMA at 152.51
- XRT (Retail): 99 resistance. Highly correlated to GME
Mish Schneider
MarketGauge.com
Director of Trading Research and Education
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
