Two Growing Sectors With Huge Potential

 

Written by Mish and Forrest

Despite worry of a pending market correction, talks of stimulus and an infrastructure package paired with a supportive Federal Reserve helped boost market moral this week.

However, specific sectors which suffered are now looking to make a comeback, and with correct positioning anyone can jump on the trend train.

From a charting perspective, the market is optimistic for the future.

This can be seen in the Economic Modern Family which shows one index and five key sectors that make up the overall market.

All are in a bullish phase, meaning the price is over the 50-day moving average, and the 50-DMA is over the 200-DMA.

This week’s winners are the Transportation sector (IYT) and the Regional Banking sector (KRE) as they are the only ones to end the week positive.

These two also happen to represent the sectors that have great upside potential.

IYT stands to benefit with from the continuation of vaccine rollouts across the U.S.

Many people are tired/restless from being kept inside or in one place.

Myself included!

As travel becomes safer, it is only natural for money to flow back into the transportation area.

A portion of IYTs holdings is in airline companies that have suffered major losses.  Stimulus has helped cut some of those losses and now with hope of more travel, some of those stocks look ripe.

For example, Delta Airlines (DAL) was trading $50-60 pre-pandemic, and is now sitting at $46.

The Regional banks ETF KRE also has room to grow, as it has only recently broken over its highs from early 2020 at around $59.

With low interest rates, people have an enormous amount of buying and borrowing power.

A couple of interesting banks that have more room to grow are M&T Bank (MTB) and Well Fargo (WFC).

Moving on to the other Family members, we have Granddad Russell 2000 (IWM), Granny Retail (XRT), Brother Biotech (IBB) and Sister Semiconductors (SMH).

IWM sits under the 10-DMA at 225.37. IWMs high is around $230 and the support sits at 217-222.

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