Tech Weighs, but Other Groups Pick up the Slack – Biotech and Banks Lead
- Arthur Hill, CMT
Welcome to the Chart Fix!
The technology sector is weighing on the S&P 500 as SPY corrects in June. Other sectors, however, are picking up the slack with industrials and healthcare moving higher. This June rotation is also benefitting the Regional Bank ETF and Biotech SPDR, which hit new highs. Today’s report will cover the recent rotations and show how the trade the trend in these two ETFs.
- Healthcare, Finance and Utes Pick up the Slack
- Industrials, Banks and Biotechs Lead with New Highs
- Building a Position within an Uptrend (XBI and KRE)
Recent Reports and Videos at TrendInvestorPro
- Rates Weigh on Gold and Small-caps – GLD Hits Moment of Truth
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- HCA and UHS Attempt to Bottom – LMT and RTX Become Oversold
- SPY-QQQ-XLK Hold Up – Semis Hit Moment of Truth – Two Healthcare ETFs
- Click here to take a trial and gain full access.
Industrials, Healthcare, Finance and Utilities Pick up the Slack
The first chart shows performance for SPY, QQQ, XLK and nine other ETFs in June. Technology (XLK) is leading the pullback with a 3.38% decline. Tech is also weighing on SPY and QQQ, which are down around 3%. Tech accounts for 37.5% of SPY and 67% of QQQ. The other nine are positive, which means money is rotating into these areas.
Among the sectors, Healthcare (XLV), Finance (XLF), Industrials (XLI) and Utilities (XLU) are leading. Within Healthcare, the Biotech ETF (IBB) is up over 6% and the Biotech SPDR (XBI) is the biggest winner with an 11% gain.
Within finance, the Regional Bank ETF (KRE) and the Bank SPDR (KBE) are up over 7% month-to-date. Within industrials, the Aerospace & Defense ETF (ITA) is up .82%.
Banks and Biotechs Lead with New Highs
The next image shows CandleGlance charts with for leaders with the price-relative in the indicator window. The price-relative is a ratio plot that defines performance relative to SPY (relative performance). This ratio rises when the ETF outperforms SPY and falls when the ETF underperforms.
First, note that all nine are above their rising 200-day SMAs. Second, XLI, IBB, XBI, KRE and KBE hit new highs this week (blue circles). These are the true leaders.
The pink arrow-lines in the indicator windows show the price-relatives falling as these ETFs underperformed into May. The blue arrow-lines show the price-relatives turning up as these ETFs outperformed in June. Industrials, banks and biotechs show the steepest rises this month.
Biotech SPDR Breaks Out of Bullish Consolidation
Pullbacks and consolidations offer chances to trade in the direction of the bigger uptrend. This is the basic strategy at TrendInvestorPro. First, we must be in a bull market. Second, the ETF must be in a long-term uptrend. Once these prerequisites are in play, traders can look for tradable pullbacks and consolidations. This is the strategy at TrendInvestorPro.
XBI moved into a long-term uptrend with a break above the 200-day SMA in August. The ETF continued higher into January (5 months) and then corrected with a falling channel into April. This is a tradable pullback. XBI then broke out and hit new highs.
A triangle consolidation formed from mid April to mid June and XBI again broke out on June 17th. A consolidation within an uptrend is a bullish continuation pattern. XBI raced to new highs after the breakout. Note that TrendInvestorPro featured the falling channel and triangle as they were taking shape (before the breakouts).
The indicator window shows %B (20,2), which reflects the relationship between the close and the Bollinger Bands. %B is below 0 when the close is below the lower Bollinger Band (20,2). This is a short-term oversold condition that alerts chartists to a tradable pullback.
%B dipped below 0 in early February and again in mid May. The oversold condition does not always mark the low for the pullback. This is why traders must turn to the chart to identify the pattern and the breakout level to watch. An oversold condition is an alert to pay close attention to the chart.
Building a Position within an Uptrend
The next chart shows the Regional Bank ETF (KRE) with pullbacks, consolidations, oversold readings and breakouts. The uptrend in KRE is not as strong as XBI because KRE dipped below its 200-day SMA in July, October, November and March. Nevertheless, an uptrend was present with the series of higher highs and higher lows since the June 2025 breakout.
The pink arrow-lines show when %B became oversold. The solid blue lines on the price chart mark the patterns in play, while the short pink lines mark the short-term resistance levels. KRE moved higher from July to June and offered four tradable patterns along the way.
Trading pullbacks and consolidations within an uptrend offers a chance to build a position as the trend extends. The uptrend remains in force until proven otherwise. The time to exit is when the long-term trend turns down and/or a bear market signals. This is the strategy at TrendInvestorPro.
Recent Reports and Videos at TrendInvestorPro
- Rates Weigh on Gold and Small-caps – GLD Hits Moment of Truth
- Breadth Deteriorates, but Models and Yield Spreads Still Bullish
- HCA and UHS Attempt to Bottom – LMT and RTX Become Oversold
- SPY-QQQ-XLK Hold Up – Semis Hit Moment of Truth – Two Healthcare ETFs
- Click here to take a trial and gain full access.
