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Mish Schneider Should you keep an eye out for small caps, biotech and semiconductors?

In this article, Forrest Crist-Ruiz, assistant director of trading research and education at MarketGauge.com, provides insight into which indices might indicate a big market move.

On Sunday, we concluded that if most of the major indices could clear to new highs along with the iShares Russell 2000 ETF [IWM] breaking out of resistance from $226.69, the market had the potential to make a powerful move up.

However, while none of the indices broke out to new highs Monday, IWM was able to clear its pivotal resistance level at $226.69.

This is important because IWM has been lagging for most of April, while the Nasdaq 100 (represented by the Invesco QQQ ETF [QQQ]), SPDR Dow Jones Industrial Average ETF [DIA], and the SPDR S&P 500 ETF [SPY] were able to break to new highs and are currently holding near them.

A continued rotation back into the small caps would be a healthy shift for the market, especially if the other indices hold their current price levels.

Next, we can watch for IWM to head back to new highs at $234.53.

To add more depth to the current market picture, key sectors, like biotech (represented by iShares Nasdaq Biotechnology ETF [IBB]) and semiconductors (represented by the VanEck Vectors Semiconductor ETF [SMH]) were able to clear or hold over pivotal areas.

SMH made a break back through its 10-day moving average (DMA) and IBB had a second daily close over its 50-DMA. This confirmed a bullish phase change.

However, if the major indices cannot clear to new highs, we have three main price levels to watch for, as follows:

  • SMH to hold over its 10-DMA at $249.28.
  • IWM to stay over $226.69 as a new support level.
  • IBB to stay over the 50-DMA at $154.42.

This article was originally published on MarketGauge. With over 100 years of combined market experience, MarketGauge's experts provide strategic information to help you achieve your investing goals.

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