Tue. Oct 26th, 2021

Since mid-May, the transport sector (IYT) has been declining. Currently, IYT is just below the resistance of its 50-day moving average at $ 257.97. In addition, the Russell 2000 Small Capitalization Index (IWM) has been trading sideways for over a month and continues to have trouble clearing its fundamental resistance level of $ 225. Since IWM represents a large part of the economy and IYT can be correlated with the movement of goods within the economy, both are key symbols for monitoring market strength or weakness.

Mish returned from vacation today and noted that the NASDAQ has also traded sideways, the Russell is lower, while the S&P 500 and Dow are much higher. And that is after 3 weeks.

Overall, the market reacts even more to the Fed’s continued stimulus expectations along with ongoing low interest rates. Utilities and basic consumers have skyrocketed. So if SPY and DIA are so happy, why can’t the Modern Family show us more enthusiasm?

That said, what other symbols do we observe that could help IYT and IWM clean up nearby resistance?

Since the beginning of the pandemic, the Fed has played an important role in supporting the market and the economy. One of its main programs has been the monthly 120 billion bond purchase program. Therefore, to monitor the effectiveness of federated spending, we can look at the High Yield ETF (JNK).

JNK is currently below its 50-DMA at $ 109.49. To show that investors are still very bullish, JNK will have to withdraw from the 50 DMA. So along with looking at IWM and IYT to erase the near resistance, we should look at JNK as it can be used to indicate how far Federal money is helping drive the market.

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ETF Summary

  • S&P 500 (SPY): New highs.
  • Russell 2000 (IWM): You need to clean the resistor to 225.
  • Dow (DIA): 351 support.
  • Nasdaq (QQQ): 362 support.
  • KRE (regional banks): It maintains its 50-DMA at 64.99.
  • SMH (semiconductors): Next support area 256.94 the 50-DMA.
  • IYT (transport): See two daily closings on the 50-DMA at 257.97.
  • IBB (Biotechnology): Support area the 50-DMA at 164.05
  • XRT (retail): Support 93.51. 98 resistance.

Forrest Crist-Ruiz


Deputy Director of Research and Education in Trading

Mish tailors

About the author:
Mish Schneider is Director of Business Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided information and financial education to thousands of people, as well as major financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, Dow Jones-owned MarketWatch named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of RealVision’s best selection of the year. Learn more

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