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A year ago today, the S&P 500 hits its 2011 highs. Basic Materials ETF (IYM) reflected weakness before the 500 hit its highs. Looking back of the past one year, IYM is trailing/underperformed the S&P 500 by 20%. Odds are pretty high that the S&P 500 needs this sector to break falling resistance, before an extended and quality upside move in the 500 is to take place.
Watch this lager right now, as it continues to create lower highs at a key falling resistance line/top of its flag pattern. Weakness in IYM in early 2011 was a suggestion that investors should be cautious when constructing a portfolio….the message remains the same one year later!
B…You are spot on in your numbers…Thanks for pointing them out.
Even though the 500 is up since IYM’s peak in Feb, some assets/sectors haven’t faired so well.
How have Emerging markets done since then? (EEM Down 8%) How has the CRB done? (CRB down 9 of the last 10 weeks-Lost 10%) How has Crude oil performed? (Crude oil is down $12- lost 10%) Gold is off $90 per ounce and Silver has lost 14% of its value.
You’ve point out correctly that the 500 has done well, despite IYM’s weakness. At the same time the broadest of markets, NYSE and Wilshire 5000 don’t have the performance numbers to brag about.
I will post later today that the CRB (which is down 9 of the last 10 weeks) is facing a critical “Triple Support” situation. How many markets perform in the weeks and months to come will most likely have much to do with how the CRB handles these support lines.
Chris
Chris – IYM peaked in early Feb and since that time the SPX is up ~450 bps.
+450 bps in a quarter is pretty decent with IYM lagging so much.
Further, though important, XRT and the REIT indexes are breaking out to new cyclical rally highs, which is also important price action.
Shanghai seems intent on busting out of a pennant pattern that’s developed for ~10 years and Spain is ~450 bps away from hitting trend line support off the 2004 and 2009 lows.