Let’s look at some specific sectors via ETFs. The first is a favorite, which is the homebuilders.
The iShares U.S. Home Construction ETF (NYSE:ITB) has been in an ascending channel for many years, and it has completed a remarkably good topping pattern within the confines of that channel. I believe it could get as low as the lower trendline, ultimately.
Another real estate oriented fund is, of course, our old friend the iShares U.S. Real Estate ETF (NYSE:IYR), which has an exceptional topping pattern. The analog is not in place anymore, but only for the best of reasons—the fact that the present topping pattern is vastly better (and thus no longer analogous) to the former.
Regional Banks via the SPDR® S&P Bank ETF (NYSE:KBE) has broken its uptrend and has likewise finished a topping pattern. It isn’t the cleanest in the world, but it isn’t bad.
A similar fund, Financial Select Sector SPDR® Fund (NYSE:XLF), though this one for the big banks, has a superior topping pattern.
Lastly, the Consumer Discretionary Select Sector SPDR® Fund (NYSE:XLY) has muscled its way higher, but only to accomplish the reach for major resistance, which I believe will hold fast, leading to a hard fall in price.
