Last week we saw a sea of green across the market. SPY was up 1.95% on the week, QQQ 2.96%, IWM 2.11%, SMH 4.20%, IBB 3.76%. Year to date, all major sector ETFs are up double digits %.
With stocks hitting all-time highs, is there still further upside? Can we get reasonable risk: reward opportunities at these levels?
To answer those questions, you must first take a closer look at particular sectors and specific stocks within those sectors showing relative strength.
Per FINVIZ, the above map shows you the S&P 500 index stocks categorized by sectors and industries. The size of each square reflects the market cap. You can clearly see by the wave of green that last week was dominated by positive performances across the various sectors.
The Overall Market
Year to date, the SPDR S&P 500 ETF (NYSE: SPY) is up 17.62%. The market continues to rage higher with buyers firmly in control. Each time SPY has tested support of the uptrend, buyers have stepped in and held the line.
Pullbacks continue to be bought, so it is essential to put your bias aside and respect the price action. As we near the uptrend’s resistance, you could expect to possibly see some selling and profit-taking around $440 – $445.
The two largest weightings of the S&P 500 are Apple and Microsoft. To see a list of the top 10, click here.
It is always good to check in with the highest weighted stock within a specific ETF, as volatility in that particular name could impact the overall ETF. So let’s take a closer technical look at the most prominent weighted name in the ETF.
Apple (NASD: AAPL) is up 11.96% year to date and 60% over a year. The stock has an average target price of $159.34 by analysts, significantly higher than where the stock closed on Friday ($148.56).
AAPL recently took out a significant resistance level, which stood as the previous all-time high and high of the year( $145.09). That price has since turned from resistance into support. After taking out this last high, the stock pulled back and quickly found buyers. This is a healthy and bullish sign. In the future, a move over $150 would be bullish and could see momentum buyers step in for another leg. If the stock consolidates and spends time over the previous high of $145, we could see a potential breakout trade setup if we push out of the range towards $150.
The ISHARES Biotechnology ETF has favored the bulls lately and is my favorite sector at the moment! The ETF is up 3.76% on the week, 10.05% year to date, and 19.54% over a year.
The biotech sector is in a significant uptrend because the stock continues to make higher highs and higher lows and remains firmly above crucial moving averages.
You can see that the IBB recently broke above resistance and now looks to be heading towards the $170 mark. As long as the ETF continues to hold the uptrend, it appears the bulls are firmly in control, and the stock could be on its way to making new highs.
The top holding of the IBB ETF is Amgen (NASD: AMGN). To see a list of the top 25 holdings of the IBB ETF, click here.
AMGN is up 7.74% year to date and has an average target price of $254.96 by analysts, slightly higher than the close on Friday of $247.72.
The stock has coiled nicely between $240 and $250. This is a setup that is loved by the bulls. AMGN is a stock that is in a hot sector, consolidating on the daily chart and poised for a breakout. A move over $250 will signal a breakout and be viewed as bullish for those eagerly waiting to buy the stock.
Next up will be the $260 resistance area. Ideally, you would want to see the stock break above and hold above $260, which would signify that the stock could have further momentum to the upside.
It is always important to ask yourself: Where have we come from? Where are we now? Where could we go? Well, with the market at all-time highs, it appears that the bulls are firmly in control and show no signs of slowing down. Still, there remains plenty of opportunity for stock-specific breakouts and sector ETF breakouts with the market at such high prices.