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  • Columnist

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.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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