iShares Nasdaq Biotechnology (IBB)
Biotechnology continued to lag the market in the past week and it is struggling to find a bottom, slipping on a day when many sectors rallied. A solid bounce is still likely here, but the fund is hanging onto its last threads of long-term momentum leadership. The 200-day moving average is not far away now. The last time IBB hit that support line was in November 2012, just before the markets staged a year-long rally.
First Trust Dow Jones Internet (FDN)
This Internet fund bounced off its 200-day moving average. If that holds, we may have seen the end of this corrective phase in the market. If that line doesn’t hold, it would raise the possibility of another round of selling. As of today, odds favor the bullish interpretation at least for the very short-term.
Guggenheim Solar (TAN)
Solar sold off with biotech and Internet shares in March, but it performed much better the month before, leaving it in a stronger position as a possible rally kicks off. Oil prices remain strong and that is giving solar a little extra support.
TAN needs to rally 18 percent to hit a new 52-week high.
iShares U.S. Oil & Gas Exploration & Production (IEO)
Oil prices bounced over the past week keeping energy stocks strong. They were pulled lower when stocks slipped on Friday and Monday, but they remain in a confirmed uptrend. Geopolitical instability is helping keep energy prices elevated. A positive forecast for the global economy helps as well. Copper is back above $3 as China fears faded and emerging markets are bouncing. Whether this is a bear market rally or a sustainable rebound remains to be seen, but for investors with a bullish bias, energy is definitely shaping up to be a leader.
Utilities Select Sector SPDR (XLU)
Speaking of leaders, the utilities sector is making a powerful case that it is the new leader. Shares were barely nicked in Friday and Monday’s broad stock market sell-off, then hit a new high on Tuesday.
Financials Select Sector SPDR (XLF)
Financials are the second largest sector in the S&P 500 Index. Earnings season for the sector kicks off this Friday with Wells Fargo (WFC) and J.P. Morgan (JPM) reporting, followed by a slew of major banks next week. Right now, JPM and WFC are two of the better performing financial stocks and they make up a significant portion of some ETFs. In XLF, they combine for nearly 17 percent of assets.
Other financial shares are not doing as well, particularly the investment banks that make up a large portion of iShares U.S. Broker Dealers (IAI). This fund had been a momentum leader before hitting a rough patch. With earnings for these banks coming up, the financial sector is headed for a make-or-break week, and given its role in the S&P 500 Index, it could be one for the broader market as well.