Mish's Market Minute

Why You Need to Watch These 5 Key Sectors and Major Index

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One of the best ways to get a quick snapshot of the market is by using Mish's Economic Modern Family. These 5 sectors and 1 index can help guide us through the overall market, as well as reveal potential weak spaces to be cautious of.  

Tuesday has seen members of the Modern Family reach pivotal price levels. With that said, let's look at which key points we are seeing and how this could affect the coming week of trading from a technical standpoint.

Starting with the small-cap index Russell 2000 (IWM), one thing is very clear; the 50-Day moving average at $224.86 -225 is a major resistance level that needs to clear and stay over. For the past two weeks, IWM has failed 4 separate attempts to clear resistance at $225.

Next up is the Transportation sector (IYT). Stuck within a downward trend, it could be looking to clear over last week's consolidation area sitting at $253.57. If it can clear resistance, it will need to show it can hold with multiple closes over this price area to prove the downward trend is giving up.

Moving on, the Retail space (XRT) made a surprise comeback from last week's breakdown and is once again testing resistance at $97. Like IYT, it will need multiple daily closes over this level to prove it can clear resistance and hold.

Meanwhile, the Regional Banking sector (KRE) will need to confirm a bullish phase change with a second close over its 50-DMA at $65.25.

On the other hand, both the Biotech (IBB) and Semiconductor (SMH) sectors are taking a breather from their recent moves higher. Specifically, SMH is looking to test its recent support area from the highs of June through July.

Overall, the market is sitting in a very pivotal price area, with the potential to make a sold push higher if it can clear these main price levels and hold recent support. This is especially true if IWM clears $225 and IYT can clear and hold over $253.57.


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ETF Summary

  • S&P 500 (SPY): Holding highs with support 436.
  • Russell 2000 (IWM): Still needs to clear 225 resistances.
  • Dow (DIA): New highs.
  • Nasdaq (QQQ): Flirting with the 10-DMA 366.89.
  • KRE (Regional Banks): Watching for second close over the 50-DMA at 65.35.
  • SMH (Semiconductors): 263.86 support area.
  • IYT (Transportation): Looking for another close over the 253.57 area.
  • IBB (Biotechnology): 174 possible resistance area from weekly chart.
  • XRT (Retail): Sitting in resistance from 97.


Forrest Crist-Ruiz

MarketGauge.com

Assistant Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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