Wednesday showed weakness in key sectors including the biotech ETF (IBB), the semiconductor ETF (SMH) and the transport ETF (IYT).
We have been watching the transportation sector closely to improve its strength as it has tried to break its 50-day moving average (DMA). Instead, IYT has broken below the 200-DMA and while in support, the failed rally through the 50-DMA is showing large overhead resistance.
One sector that is holding up is the Regional Banking ETF (KRE).
However, the financial sector should also be acted cautiously with a looming debt ceiling and little time until the decision in mid-October.
On the flip side, if the market decides to push higher, it could make financial stocks alluring as their strength has been demonstrated by this week’s trading activity.
A particularly interesting bank stock is Silvergate Capital (SI).
Although it has been in range since May, if SI can hit and hold the high of its range at $ 122, it could be ready for a big move into the $ 160 area.
Another factor that could make SI a stronger bank choice is its ability to offer crypto banking services alongside traditional services.
With so many weak sectors excluding KREs, traders should remain cautious as the debt ceiling will take center stage in the coming weeks.
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Summary and Analysis of Exchange ETFs Trading:
S&P 500 (SPY) Day inside. Tuesday’s low is held at 432.94.
Russell 2000 (IWM) Must hold 220.
Dow (DIA) Day inside. 342.41 minor support to hold.
Nasdaq (QQQ) Must come back over 360.
KRE (regional banks) 66.35 support and 70 resistance.
SMH (semiconductor) 250 next support area.
IYT (transport) Couldn’t stay above the 200 DMA at 249.83.
IBB (biotechnology) 157-160 main support
XRT (retail) 92-98 range
The author may have a position in the named securities at the time of publication. All opinions expressed herein are solely those of the author and do not represent the views or opinions of any other natural or legal person.