THE FAB FIVE HOLD THEIR BREAKOUTS -- BULLISH HIGHLIGHTS OUTWEIGH CONCERNS -- THREE KEY INDUSTRY-GROUP ETFS CONSOLIDATE IN MARCH -- FINANCE SPDR AND BANK ETF SURGE TO NEW HIGHS -- AN INDEX DOES NOT ALWAYS TELL THE WHOLE STORY

THE FAB FIVE HOLD THEIR BREAKOUTS... Link for today's video. It was a wild trading week as stocks dipped sharply on Wednesday and recovered with an equally sharp advance on Thursday. The Fed, of course, got the blame for this week's volatility. Despite the dip and recovery, stocks are on schedule to post modest gains for the week. Strength in the finance sector and in regional banks is the big story. The technology sector also put in a good performance, but that is old news. Strength in the finance and technology sector was countered with weakness in homebuilder and internet stocks. Yes, there were pockets of weakness to go along with the pockets of strength, but the bulk of the evidence remains bullish for stocks. I will first look at the charts for the Fab five and then list the bullish highlights and bearish concerns.

I consider the Russell 2000 ETF (IWM), S&P MidCap SPDR (MDY), Nasdaq 100 ETF (QQQ), Equal-Weight S&P 500 ETF (RSP) and S&P 500 SPDR (SPY) the Fab five of the major index ETFs. These five provide complete, and complementary, coverage for the "stock market" and can be used to confirm each other in a Dow Theory sense. New highs by three or more mean the market is in good shape. New highs by two and non-confirmations from three would be cause for concern. A non-confirmation occurs when one ETF records a new high and the other does not. All five surged to new highs in early March, fell back last week and bounced this week. Notice that all five are holding above their breakouts as broken resistance turns first support. These major index ETFs are simply consolidating near new highs. A consolidation within an uptrend is typically a bullish continuation pattern, and the larger uptrend supports this bias. Chartists can watch support from the March lows for the first signs of weakness. The early February lows mark long-term support for now.

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BULLISH HIGHLIGHTS OUTWEIGH CONCERNS ...

Bullish Highlights

• The Russell 2000 ETF, S&P MidCap SPDR, Equal-Weight S&P 500 ETF, S&P 500 SPDR and Nasdaq 100 ETF broke out in early March and these breakouts are holding. IWM, MDY, RSP, SPY and QQQ are the fab five.
  
• The Technology SPDR (XLK) and Equal-weight Technology ETF (RYT) hit new highs this week. Relative strength in techs is positive overall.
  
• The Finance SPDR (XLF) and the Regional Bank SPDR (KRE) hit new highs. Big banks and regional banks show relative strength.
  
• The Semiconductor SPDR (XSD) and Networking iShares (IGN) hit new highs and show relative strength.
  
• The S&P 1500 AD Line ($SUPADP) hit a new high and S&P 1500 High-Low Percent ($SUPHLP) moved above +7%.
  

Concerns

• The Home Construction iShares (ITB) failed to hold its opening surge on Wednesday and shows relative weakness in March.
  
• The Dow Industrials remains below its yearend highs and did not confirm the new high in the Dow Transports.
  
• The Retail SPDR (XRT) remains short of its 2013 highs and the ETF stalled the last two weeks.
  

THREE KEY INDUSTRY-GROUP ETFS CONSOLIDATE IN MARCH... The CandleGlance charts below show ten industry group ETFs that I consider important to overall market performance. Notice that the Regional Bank SPDR (KRE) and Semiconductor SPDR (XSD) are in the middle of moonshots with new highs this week. The Internet ETF (FDN) and Home Construction iShares (ITB) are poised to test important support levels after falling this week. The Biotech SPDR (XBI) failed to hold Tuesday's big surge and fell sharply on Friday. The Metals & Miners SPDR (XME), Transport iShares (IYT) and Retail SPDR (XRT) have bullish pennants working. Upside breakouts next week would signal a continuation higher, while downside support breaks would be negative. These consolidations should be watched closely next week for clues on the market's next move.

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FINANCE SPDR AND BANK ETF SURGE TO NEW HIGHS... The big banks and regional banks seemed to like this week's Fed policy statement. Without going into details, it appears that the Fed is laying the groundwork for an end to its zero-interest rate policy, which has been in place for some five years. Keep in mind that the Fed does not want to tighten monetary policy, but merely put interest rates back to normal. While the first rate hike is still several months away, banks would benefit from a rise in short-term rates because it will improve their net interest margin, which is the difference between a bank's deposit and lending rates. Chart 7 shows the Finance SPDR (XLF) in a clear uptrend over the past year. After a rather sharp decline in January, XLF reversed in early February and surged to a new high in early March. There was a small throwback last week and the ETF again surged to a new high this week. Broken resistance and this week's low mark first support in the 21.6 area. The early February low marks key support.

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The indicator windows show three breadth indicators for the Finance SPDR. Notice that the XLF AD Line ($XLFADP) broke out to a new high the second week of February. This new high foreshadowed strength in the ETF, which did not record a new high until early March. The AD Volume Line confirmed the new high in XLF with a new high of its own in early March. High-Low Percent surged back above 10% the second week of February and remains bullish overall. Chart 8 shows the Regional Bank SPDR (KRE) hitting a new high and broken resistance marking first support in the 41 area.

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AN INDEX DOES NOT ALWAYS TELL THE WHOLE STORY... Industry group indices are supposed to give us an idea of what is happening to a group as a whole. However, many sector and industry group indices are weighted by market cap and dominated by a few players. This means a few bad apples can make an entire industry group look weak. The DJ US Trucking Index ($DJUSTK) offers a case-in-point. Chart 9 shows the index hitting a new high in mid January and then plunging below the November-December lows in February. The index got a bounce in early March, but fell back below 430 this week. The indicator window shows the price relative peaking in August and moving lower the last six months. Even though the S&P 500 is near its all time high, this chart suggests that trucking stocks are having an extremely difficult time.

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A look into the components for the DJ US Trucking Index paints a different picture. Chartists can dive into a particular Dow Jones industry index by using the Sector Summary tool. A link can be found on the right side of the Free Charts page in "Other Tools" navigation section. Once in the Sector Summary, click on the "industrial sector" and then "trucking". Chart 10 shows the stocks in the trucking group sorted by three-month performance. Excluding the three penny stocks, notice that 7 of the 21 stocks are up more than 10% and 17 of the 21 stocks are up over the last three months. The majority of the components show strength. Only 4 of the 21 stocks are down. Of these stocks, JB Hunt (JBHT) and CH Robinson (CHRW) are by far the biggest in market cap, $8.31 billion and $7.58 billion, respectively. These two are the main drivers in the DJ US Trucking Index, and the biggest dogs!

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STEEL ETF BOUNCES OFF SUPPORT ZONE... Strength in the Shanghai Composite ($SSEC) is prompting a rebound in industrials metals and their respective stock groups. The Shanghai Composite surged 2.72% and regained the 2000 level on Friday. Even though the index remains in a downtrend overall, this rebound was welcome news for industry groups within the materials sector. Chart 11 shows the Steel ETF (SLX) getting a bounce off the 43 area with a 4% advance this week. Support in this area stems from broken resistance and the 50% retracement line. Despite this bounce, the current trend is down because SLX remains within the falling wedge. Key resistance is marked at 46 and a break above this level is needed to reverse the 2014 downtrend and signal a continuation of the prior advance.

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The indicator window shows RSI with bull and bear zones. A bull zone extends from 40 to 80, while a bear zone extends from 20 to 60. RSI is currently in a bear zone after breaking below 40 in January. A break above 60 would propel RSI out of this bear zone and turn momentum bullish. Chart 12 shows weekly bars for a long-term perspective.

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AK STEEL, NUCOR AND US STEEL LEAD GROUP HIGHER... Three steel stocks stand out today with two breaking out and one challenging resistance. Chart 13 shows AK Steel (AKS) holding support in the 6 area and breaking out with a high-volume surge the last four days. Be careful with AKS because low price equals high risk.

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Chart 14 shows Nucor (NUE) breaking support in January, retracing 62% in February and breaking support last week. This break did not last long as the stock bounced back above 49 with a gap on Monday and surged around 3% on Friday. NUE is on the verge of a breakout and MACD just turned positive again.

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Chart 15 shows US Steel (X) breaking flag support last week and then surging right back above 25 on Tuesday. This flag failed and the stock followed this failure with a breakout at 26. The decline from January to early March now looks like a correction within a bigger uptrend. This week's breakout ended the correction to signal a continuation of this bigger uptrend. The indicator window shows the StockCharts Technical Rank (SCTR) breaking out and exceeding 85 this week.

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HOUSING STARTS DIP, BUT PERMITS SURGE... Housing starts dipped in February and this dip could be blamed on the weather. After all, building is an outdoor activity that is directly impacted by weather conditions. The decline in housing starts is not a concern because chart 17 shows building permits moving above the 1 million mark. These permits will turn into starts and this bodes well for the spring building season.

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JOBLESS CLAIMS CONTINUE TO FALL... When it comes to interest rate forecast and the Fed, don't listen to the news conference or read the pundits, look at the numbers. The Fed is data dependent and recent data shows a steadily improving economy, and labor market. Chart 18 shows the 4-week average for jobless claims moving to its lowest level of the year. Weekly jobless claims have been below 325,000 each of the last three weeks.

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As the March economic table below shows, the numbers have so far improved since February. Housing starts is the only number so far that has yet to show improvement.

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