Here we are, another week and another notch on the bull market belt.
Last weekend we were very bullish coming into this past week on Small Caps, Biotechnology and Regional Banks.
We were on the fence with Retail, Transportation, and Semiconductors.
This past week, the Russell 2000 (IWM) did not make a new yearly high.
However, IWM managed an inside week (the range traded within the range of the prior week.
And that makes sense considering that we had a big correction in our former leader, Semiconductors.
For this week, if IWM takes out the 227 level, we see no reason why the rally should not continue. We were particularly impressed by how well Gramps held up when the other market indices sold off.
Speaking of Sister Semiconductors SMH, after a huge bearish move the week prior, followed through with more downside this past week.
If you look at the chart and the light blue line, you can see that SMH did find support on the weekly channel. That makes 230 very important. If SMH breaks that level, we see another big drop in the works.
In contrast, the former laggard Regional Banks KRE or our Prodigal Son, has had 3 spectacular weeks in a row.
KRE cleared the 200-week moving average. However, the big crash of 2023 began once KRE broke 60-61.
Please keep your eyes there, for if Gramps can’t clear 227, or Sister Semis fails 230, then it’ll be hard to keep Regionals up.
With KRE we still do not know if this is a massive technical bear market rally or a new bull market.
Granny Retail sure knows how to hang onto critical life support!
XRT held the weekly channel low. Granny, with all the doom and gloom, closed the week up.
Are there headwinds? Sure.
Consider though the overall macro and the other 3 Family members we just mentioned. XRT will follow their lead.
And speaking of consumers, Big Brother Biotechnology also shined.
While Eli Lilly (NYSE:LLY) and Novo-Nordisk fell, Pfizer (NYSE:PFE) and Viking Therapeutics (NASDAQ:VKTX) rose as the competition for anti-obesity drugs surges on.
We still maintain the “Vanity” trade, or the trickle-down effect from a new consumer who feels better about themselves and hence will look for self-improvement, will emerge for 2025.
In the meantime, IBB looks well on its way to 160 area.
Lastly, the Transportation sector IYT had a lot of issues, especially given the CrowdStrike (NASDAQ:CRWD) problems for airlines and the dismal earnings for United Parcel Service (NYSE:UPS).
While IYT held the 50-week moving average (dark blue), it failed to return above the weekly channel low (light blue.)
IYT is an interesting piece of the puzzle.
The preface “Tran” means changeable.
Thus, we will be watching this carefully as well to see which way the winds change.
If Tran joins in the rally, it will most likely infer a sea change coming for the Fed as well.
And speaking of…
Let us not forget that the long bonds TLT have their own look of a squeeze coming.
TLT needs to confirm a phase change.
Real Motion is bullish.
TLT now outperforms SPY.
Summer is turning from “Sitting on the Dock of the Bay” to “Hot Fun in the Summertime.”
ETF Summary
- S&P 500 (SPY) 540 support
- Russell 2000 (IWM) 217 support 227 resistance
- Dow (DIA) 400 support
- Nasdaq (QQQ) Broke under the 50-DMA but weekly support 463 held
- Regional banks (KRE) 54 now support with 60 next level to watch
- Semiconductors (SMH) Failed the 50-DMA
- Transportation (IYT) 64.10 support 67 resistance
- Biotechnology (IBB) 146 support 150 resistance
- Retail (XRT) 75 support 77.50 resistance
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) 78.00 support