Technical Analysis

The Russell 2000 (RUT) at time of writing was set to end close to the high of the wide range in place since the end of April of this year. The 1350 level is an important one, with a boost above that level being a technical positive. For the coming week the range is 1350-1400 on the upside, with support in the range of 1340-1300. The best performing sectors were Consumer Cyclicals, Basic Materials, Energy, Industrials, Financials, and Health Care. Consumer Staples and Utilities were the least advanced in an all-green sector view.

The S&P 500 (SPX) is set to end the week higher, bumping up against the familiar 2950 area. This has been a very hard line of resistance that surprisingly has not been successfully challenged for long on the upside. For the coming week, the 2950-3000 area is a potential upside range test. Support is at the 2940-2910 area. Most sectors such as the Industrials (XLI), Financials (XLF), Energy (XLE), Consumer Staples (XLP), and Utilities (XLU) remain range bound. The weakest sectors are well below the midpoint of the 52-week high to low range. These are acting as drags on the index. Technology (XLK) and Health Care (XLV) are becoming range bound but at much higher levels, much closer to 52-week highs. Until that situation changes, with a broadening of the rally, the index will have difficulty advancing.

For the week, funds saw nearly equal inflows and outflows in the top twenty per data from ETF.com. On the redemptions side, more than 50% of outflows were from S&P 500 ETFs in the form of the SPDR S&P 500 ETF Trust (SPY), by several times the largest single redemption, and the iShares Core S&P 500 ETF (IVV). International funds saw notable outflows, including the UBS AG FI Enhanced Global High Yield ETN (FIHD), iShares China Large-Cap ETF (FXI), iShares Core MSCI EAFE ETF (IEFA), Schwab International Equity ETF (SCHF), and iShares MSCI Brazil ETF (EWZ). On the creations side there was only a single sector fund inflow for the S&P 500, the Health Care Select Sector SPDR Fund (XLV). The three largest inflows were to the iShares Russell 2000 ETF (IWM), double the next largest flow, Invesco QQQ Trust (QQQ), and SPDR Gold Trust (GLD). Bond funds made up the bulk of top ten creations in the form of the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD), Vanguard Intermediate-Term Corporate Bond ETF (VCIT), iShares 20+ Year Treasury Bond ETF (TLT), Vanguard Total Bond Market ETF (BND), and Vanguard Short-Term Corporate Bond ETF (VCSH).