Watching certain instruments for clues on next moves, probably the best (equities) to watch is the Economic Modern Family of stock market ETFs.
These ETFs cover everything from tech to regional bank stocks to small cap stocks to retail stocks and more.
Is our economy improving?
What sectors do not like the higher for longer conversation?
Which sectors have pricing power?
Looking at these weekly charts, I drew horizontal, parallel lines to show that at these higher levels, all the Family are rangebound when you study the patterns from late February to now.
Correction can happen in price.
Corrections can also happen through time and consolidation.
I am not even sure I would call the last several weeks’ price movements a correction, but we do see that the current consolidation makes analysis of how each sector is performing and will perform a bit easier.
Furthermore, it makes patience a key factor right now.
Plus, depending on how the consolidation levels break (up and down) it is easier to then trade by following the money.
What I love about these charts is how easily we can see rotation once ranges break.
We can also keep a cool head whilst we wait for any or all these ranges to break.
The Retail Sector ETF (XRT) trades between 75.00-80.00. Hence, until she goes up and beyond or down and below, it is best to watch.
We are keen on this sector for the future mainly because of the diet drugs. For now, though, we are happy to sit.
The Russell 2000 ETF (IWM) has a range of 200-212. IWM looks better than Retail (XRT). While IWM continues to underperform the other indices, a range break above 212 would be compelling.
The Biotechnology Sector ETF (IBB) has been stuck between 134-140 since December 2023. One thing we can say for certain-when IBB breaks its range, don’t even think about it—just follow.
The longer an instrument remains in a trading range, the bigger the move when it breaks the range.
The Semiconductors Sector ETF (SMH) consolidates between 220 and 240.
Noteworthy is that it is consolidating near the highs of the trading range and near all-time highs. That is a positive sign. Following tech and chips to the upside on a further breakout makes sense.
The Transportation Sector ETF (IYT) trades between 67-71. This is the tightest range of these ETFs.
Should that break out, consider it a good sign for the US economy and evidence of a “no” landing.
Finally, the Regional Banks ETF (KRE), has stubbornly traded between 45-50. While many thought commercial banks would fail, the best we can say is that they are holding but not wowing.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
