Monday, October 26, 2009

A Look at Lagging Segments of the Market

Above we see the Russell 2000 Index ETF (IWM; top chart); the raw materials ETF (XLB; second chart from top); the homebuilders ETF (XHB; second chart from bottom); and the regional banking ETF (KRE; bottom chart).

What do they have in common?

All failed to confirm the October price highs in the major large-cap indexes and now are falling back toward their September/October lows.

Whether those lows hold will tell us a good deal about the health of the overall market, as well as the economy. Weakness in raw materials, homebuilding, and regional banking suggests that some of the concerns from the financial crisis may not have been put behind us.