Michele Schneider | Apr 11, 2021 03:26AM ET
Last week’s focus was the Russell 2000 ETF (NYSE:IWM), Transportation Average ETF (NYSE:IYT), and VanEck Vectors Semiconductor ETF (NYSE:SMH).
IWM has shown us general market direction and sentiment as it contains 2000 small cap U.S. companies.
h2 2. IYT/h2IYT is the backbone or demand side of the economy as the U.S. opens with the increasing vaccine deployment.
h2 3. SMH/h2SMH has been involved in this year’s tech boom, but also in one of this year’s biggest supply chain disruptions.
For a plethora of reasons, from car manufacturing to increasing computer needs from the work at home environment to crypto mining, the tech space has been hard pressed for computer chips to meet demands of large and growing tech companies.
h2 In Focus/h2From a technical standpoint IWM continues to flirt with its 50-day moving average at $222.02.
Last week, IYT started to drift lower, making it look worrisome when paired with IWM which fluctuated between breaking its major moving average and holding its current price level.
On top of that, SMH has been struggling to break through highs at 258.59.
With that said, rising worries of inflation linger in the background of many investors’ minds.
Therefore, we have been watching the Invesco DB US Dollar Index Bullish Fund (NYSE:UUP) along with precious metal and food commodities, like Invesco Agricultural Fund ETF (NYSE:DBA) and gold (NYSE:GLD).
If the dollar were to begin struggling and break the support of the 50-DMA, this could cause fear as a weakening dollar buys less goods, thus increasing import prices which can lead to inflation.
DBA and GLD can also display signs of inflation as investors flock to their safety as prices increase.
As for Monday’s game plan, we can watch for our 2 key ETFs and Index to hold, break, or clear their current price levels.
From a bullish standpoint, this means watching IWM to hold over its 50-DMA and for IYT and SMH to head back up to recent highs.
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