June 22, 2026
Preview from my weekly report*
Market
Overview: most stock indexes are near their highs and in strong
technical positions.
Stock price indexes finished mixed last week as investors
struggled to interpret developing news about the Iran peace deal and the likely
path of interest rates ahead. Of the major US index ETFs, only the Small-cap Russell 2000
(IWM) rose
to new all-time closing price high on 6/18/2026, although most
other indexes are near their highs and in strong technical positions. The large-cap Technology ETF
(XLK, 191.44) has recovered most of its early
June loss. A lasting peace deal may stimulate global economic growth and ease
speculative fears regarding inflation, rising interest rates, unsustainably
rapid earnings growth, a massive AI investment bubble, and equity
overvaluation. Well-informed technology insiders are confident that high growth
rates can continue for years going forward. The main trend for XLK remains
clearly bullish above rising 50-day and 200-day SMAs. The Energy Sector SPDR (XLE, 53.77) confirmed
short-term weakness last week when it fell to its lowest level since 2/17/2026,
before the war started, and fell further below its declining 50-day SMA (now at
57.44). XLE peaked at 63.46 in March, 61.70 in May, and 59.38 in June. XLE
broke down last week below the May lows at 55.99 at 55.13. The developing
pattern of lower highs and lower lows defines the downtrend. Further weakness
below 53.25 seems likely to lead to a test of the 200-day SMA now at 50.91. Transportation (IYT) encountered profit-taking after peaking at a new all-time
high at 87.87 last week. IYT remains in a bullish position above rising 50-day and
200-day SMAs. Materials (XLB) eased
modestly lower but remains bullish above rising 50-day and 200-day SMAs above
51 and 48. Look for resistance around the previous
highs of 53.31 and 54.14. Industrial (XLI) jumped
to a new all-time high on 6/18/2026, so there is no upside resistance. Look for
support around 176-177 and above 173-174. Regional Banking (KRE)
encountered profit-taking after peaking at a new 4-year high at 74.27 last
week. KRE remains in a bullish position above rising 50-day and 200-day SMAs
above 69 and 66. Look for resistance around the previous high of 74.27 and
78.81. Real Estate (XLRE) reversed to the downside after rising to a new 52-week high
at 45.65 last week. XLRE closed below its 50-day SMA now at 44.12, a sign of
weakness for the short term. Look for support around the previous lows of 43.08
and 42.12. Look for resistance around the previous highs of 45.65 and 52.17. Consumer Staples
(XLP) fell below its 50-day SMA at 83.63, turning neutral for the
short term. Look for resistance around previous highs of 86.35, 86.70, and
90.14. Look for support around the previous lows of 81.48 and 80.46. Utilities (XLU) remains stuck
below the 50-day SMA, so the trend remains neutral. Look for resistance around
the previous highs of 45.64 and 47.30. Look for support around the previous
lows of 43.07 and 40.07. Consumer Discretionary (XLY) remains stuck below its 200-day SMA and continues to
underperform. Look for resistance near previous highs around 119.51, 122.19,
and 125.01. Look for support around the previous lows of 113.38 and 105.19. Communication (XLC) remains
bearish below its 50-day and 200-day SMAs. Look for resistance around previous
highs near 155 and 115. Look for support around the previous lows of 106.72 and
105-106. Retail (XRT) remains
in a neutral trading range. Look for resistance near previous highs around 89
and 91. Look for support around 82 and 78. Health Care (XLV) reversed
to the downside after peaking at 155.16. Look for resistance around previous
highs near 153 and 155. Look for support around 145 and 142. Financial (XLF) reversed
to the downside after peaking at 54.89 on 6/17/2026. XLF remains above the 50-day
and 200-day SMAs. Look for resistance near previous highs around 54.89 and
56.51. Look for support around 51 and 48. International equities are strong except for China. The Emerging Markets ETF (EEM) again proved that it
is the strongest by rising to a new all-time high last week. EAFE ETF (EFA)
remains slightly below its high but remains in a bullish position above 50-day and
200-day SMAs. In contrast, the China Large-Cap ETF (FXI) plunged below
52-week lows last week and fell further below both 50-day and 200-day SMAs. FXI
has been underperforming EEM and EFA. FXI also has
underperformed the S&P 500 for 19 years since 2007--a major long-term
trend. Technical conditions continue to point to persistent underperformance by
FXI, so exposure should be avoided. Currencies, Crypto, Commodities, and
Fixed Income The U.S. Dollar Index ETF (UUP, 28.30)
rose to its highest level since November and remains technically bullish above
SMAs. Look for resistance near previous highs around 28.45 and 30.76. Look for nearby
support around 27.87, 27.63, and 26.40. Crypto-related stocks remain in unfavorable trends and
should be avoided. The iShares Bitcoin Trust ETF
(IBIT, 35.62) fell to its lowest level since October 2024 on 6/5/2026, confirming
previous sell signals. Longer term, IBIT is below its 50- and 200-day SMAs, and
the 50-day SMA has been stuck in a bearish position below the 200-day SMA since
12/11/2025. The iShares Ethereum Trust ETF (ETHA, 11.87) continues to
underperform IBIT and is in a weaker technical position. Copper (CPER), an industrial metal, reflects prospects for global
economic growth, which should benefit from a lasting peace deal. Copper remains
in a strong position above its rising 50-day and 200-day SMAs. Look for
resistance near previous highs around 39.82 and 40.78. Look for nearby support
around 37.40 and 35.33. Precious metals are below both 50-day and 200-day SMAs and remain out of
favor. Silver (SLV), Gold Miners (GDX), and Gold (GLD) probably
will continue to underperform. Energy markets again
confirmed bearish momentum for the short term last week as WTI Crude Oil Futures
(nearby contract CLQ26, 76.85) and Oil ETF (USO, 114.87) both broke
down below 2-month lows and fell further below 50-day SMAs. U.S. fixed-income
price trends are
diverging by their maturities, the shorter the maturity the more bearish the
trend. The 3-Month SOFR (SQZ26) and the 2-Year T-Note Futures (ZTU26)
fell to their lowest price levels in more than 10 months last week and remain
bearish. In addition, the 5-Year T-Note
(ZFU26) and the 10-Year T-Note Sep '26
(ZNU26) did not make lower lows but nevertheless remain in bearish positions
below both 50-day and 200-day SMAs. In contrast, the 30-Year T-Bond (ZBU26)
crossed above its 50-day SMA on 6/15/2026, turning neutral. All this appears to
imply downside pressure for prices and upside pressure for interest rates for
the short term. Momentum
and Breadth for the U.S. stock market remain bullish. Within the S&P 500, 56.0% of stocks trade
above their 50-day SMAs (down from 61.0% the previous week), and 61.0%
are above their 200-day SMAs (down from 61.6%). These are still strong
numbers, indicating bullish breadth. Net New Highs eased
lower to +25, down from +155 a week ago. Readings above zero for new
highs minus new lows suggest a bullish trend. Sentiment Indicators show less
pessimism. The AAII Bulls/Bears survey still
shows a majority of bears, with 36.6% bullish versus 39.4% bearish.
The Put/Call Ratio fell to 0.58 last week, modestly below its
10-year mean of 0.62, indicating pessimism. The VIX Index fell to
16.40 last week, below its 10-year mean of 18.79, indicating mild
optimism. The CNN Investor Sentiment Index still shows Fear at 37,
up from its low of 27 on 6/10/2026, but down from 71
on 4/20/2026. Historically, fear and pessimism have provided a bullish
foundation for market rallies.
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