As I’ve been writing about over the last few weeks, stocks have been in their own little world. The persistent, incremental move to new highs in the S&P 500 and the Dow Jones Industrial Average hasn’t been supported by the economic data, profits data (which just rolled over in Q1 by the most since Lehman Bros. blew up), the bond market, the commodities market or the foreign exchange market. But none of that mattered. Nor did the lack of participation by small-cap stocks, with the Russell 2000 not only well off its highs set earlier this year but struggling to stay above its 200-day moving average — a long-term measure of trend strength. Unfortunately, the problem is only growing — festering like an infection — as key cyclical sectors continue to lag behind. Here are four to keep an eye on:

Cyclical Sectors Feeling Pressure: Regional Banks

Cyclical Sectors Feeling Pressure: Homebuilders

Cyclical Sectors Feeling Pressure: Steelmakers

Cyclical Sectors Feeling Pressure: Retailers

Click to Enlarge The Retail SPDR (XRT) — which holds stocks including Staples (SPLS) and Big Lots (BIG) — also has been struggling to stay above its 200-day moving average since April as the U.S. consumer his showing signs of fatigue. Retail sales recently disappointed, with sales ex-autos and gas dropping outright in April over March. The weakness looks set to continue with wages stagnant, short-term credit on the rise and the savings rate dropping. All of this suggests household budgets are under pressure. With roughly two-thirds of the U.S. economy still dependent on retail spending, the lack of performance in the XRT is a nagging sign that all is not well.

How to Play It

Click to Enlarge As a result of the lingering weakness, short side opportunities are presenting themselves in these areas. I recommended the X stock June $25 puts to my Edge Pro clients back on May 23. The contracts are currently up more than 85%. Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters, as well as Mirhaydari Capital Management, a registered investment advisory firm.