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Most Sectors Hit New Highs Reflecting Bullish Signal

David Becker
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The overall picture remains bullish for stocks and seven major index ETFs hit new highs this past week. These include the Nasdaq 100 Equal-Weight ETF, Nasdaq 100 ETF, Russell 1000 iShares, S&P 1500 ETF, S&P MidCap SPDR, Equal-Weight S&P 500 ETF and S&P 500 SPDR. Five of the nine sector SPDRs hit new highs this week. The majority rules and the majority remains bullish. These sectors include technology, energy, consumer staples, healthcare and utilities. Even though four of the five are “non-offensive” sectors, the majority of sectors hit new highs this level and this is a net positive.

Seven of the nine equal-weight sector ETFs hit new highs, which is two more than the market-cap weighted SPDRs. These include technology, finance, energy, materials, consumer staples, healthcare and utilities. The equal-weight versions show even broader strength in the market. The Equal-weight Technology ETF, Equal-weight Utilities ETF and Equal-weight Energy ETF leading over the past month. Broad strength in the tech sector shows a healthy appetite for risk.

The Consumer Discretionary SPDR (XLY) and the Equal-Weight Consumer Discretionary ETF (RCD) have yet to hit new highs, and are lagging the above group. The XLY moved above resistance in the 64-65 area with a surge in May, but falling short of a break above the early March high. The consumer discretionary is the most economically sensitive sector and relative weakness in this sector could weigh on the market. The broken resistance zone in the 64-65 area turns first support.

The Home Construction iShares (ITB) continues to struggle after its breakout. The ITB is breaking the wedge trend line in late May and following through with a surge above 24.5 in early June. The wedge breakout is still holding, but ITB is having a hard time getting any upside traction as it fell below 24 last week and stalled this week. The trend line break, June lows and a small buffer combine to mark a support zone in the 23.5-24 area.

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