Falling lumber and a health-care divergence: Here’s what could drive the market on Wednesday

As all major U.S. stock markets closed the trading session slightly lower on Tuesday, Miller Tabak equity strategist Matt Maley broke down what he is watching for on Wednesday.

1. Lumbering lower

The price of lumber has fallen more than 8 percent over the last month, recently dropping to its 200-day moving average. Maley is watching lumber's movement as it's directly correlated to housing stocks; he looks specifically to the Dow Jones homebuilder exchange-traded fund.

"We've gotten some weak data from the housing industry lately. The ITB housing ETF just bounced off its 50-day moving average, but if lumber continues to decline it could lead to some weakness in the housing group," Maley said Tuesday on CNBC's "Trading Nation."

Indeed, the most recent mortgage application data showed a drop as housing inventory falls across the country.

This despite homebuilder sentiment hovering near the highest level since the recession, according to the National Association of Home Builders.

2. Stuck in transit

Transportation stocks have lagged the Dow this year, Maley pointed out. He is watching specifically the S&P rail index and an airline index, the XAL , to track whether the Dow Jones transportation index can see upside.

Until recently, the railroad stocks have lagged transport names; the S&P rail index is now making new all-time highs. Additionally, the XAL is making multiyear highs.

If those indices "can see more upside follow-through, it could help the transportation index play catch-up in the near future," Maley said.

3. Biotech double-check

Maley is watching movement in biotech and health-care-related stocks. One popular health-care exchange-traded fund, the XLV , made a new all-time high last week, Maley pointed out, but one large biotech ETF, the IBB , is still lagging.

"Since this is a divergence that's only a few days old, this is not a big concern yet. In fact, the IBB is within shouting distance of its own key resistance level of $300," Maley said.

The $300 mark is precisely the level that has "stopped" the rally a handful of times in the past year, Maley said. If the fund can finally break above that level, the group as a whole should see upside.

The IBB closed slightly lower on Tuesday, at $292.80.