SPY has climbed above $199, which represents an important resistance level. A pullback before moving higher is possible, but once SPY climbs above $200, it will have firm support.
Its prior underperformance has primed the small-cap index for a bounce. IWM needs to hold above $107 to break the downtrend in place since June 2015.
The Dow remains in relatively good shape and the dividend-paying stocks represented by SDY continue to set new all-time highs.
Currencies could be more volatile over the next week as the European Central Bank, Bank of Japan and Federal Reserve will all hold monetary policy meetings.
The U.S. dollar, represented by the broader index tracked by USDU is approaching a key level, and holding above its current $26.50-$27.00 range preserves the U.S. dollar bull market.
Emerging market currencies have rallied strongly alongside natural resources. The rapid advance calls for a pullback back to $16.75 or so for CEW, while the $17.50 level above is an important near-term resistance level.
Oil has experienced a nice rally in the past few weeks and now it faces a key test around the $40 resistance level.
Much of the recent move was driven by short covering that enables a possible pullback. FCG has rallied 40 percent in a little more than a week.
Last week, the U.S. imposed tariffs on steel imports, hitting Chinese steel with triple-digit charges. Steel stocks surged on the news, sending SLX up more than 10 percent on the day. Short covering has helped fuel these moves as well, with iron jumping 19 percent in one day. Until there is a firming of prices and a sustained rally, the industrial metals remain in a bear market with lower lows still possible.
iShares MSCI Emerging Markets (EEM)
EEM has cleared the $32 range and is back into its former trading range. A combination of emerging market currency and crude oil rallies boosted shares. If these trends continue, a push into the high $30s or low $40s is possible later this year.
SPDR Utilities (XLU)
SPDR Pharmaceuticals (XPH)
SPDR Materials (XLB)
SPDR Consumer Staples (XLP)
SPDR Consumer Discretionary (XLY)
SPDR Healthcare (XLV)
SPDR Technology (XLK)
SPDR Financials (XLF)
SPDR Retail (XRT)
Utilities made an important breakout last week; shares of XLU exceeded the high set in early 2015. XLU had been doing well based on weakness in the stock market and falling interest rates, but even now with rates higher and investors wading back into the riskier sectors, utilities is still powering ahead. Consumer staples is also at a 52-week high.
HYG rallied right to a resistance level prior to a pause. A pullback following the recent rally is likely.
Investment-grade bonds are also attracting investor interest, which have been vulnerable to credit risk as well, as depicted in the chart of the 5-year treasury yield. LQD peaked in February 2015 when rates were only slightly lower than they are now. This leaves some upside potential for these corporate bonds even if interest rates continue to rise.