US Sector update Below is a sector analysis based on ichimoku. www.ichimokutrade.com.
The month of May begins an interesting time of the year where investment portfolios require additional attention to avoid adverse moves in the net value. Many of the bullish sectors that have been top performers over the past little bit have begun to show signs of weakness with majority of them having a change in the daily sentiment. The summary table highlights key levels across the 10 sectors of the S&P500.
Financials
XLF held the 22.79 support and is attempting a retest of the 23.59 resistance level based on the weekly timeframe. The daily continues to hold its bullish sentiment however price will need to make a decision soon to avoid losing its momentum. A break below this support could open the 22 level and a break of that support could alter the long term sentiment of this sector.
Healthcare
XLV continues to hold the 68.88 support level highlighted with multiple retests over the past few weeks. The price action continues to be messy on the weekly timeframe and is not showing signs to clear up anytime soon. The daily continues to maintain its bullish sentiment with price above the cloud however a few more days of sideways action could change that. This sector needs to break above to retest the pivot or it could see some more downward pressure and break key supports and get to the 67 level.
Industrials
XLI closed below the weekly support level of 55.74 reducing the probabilities of a retest of the all time highs. The daily sentiment is all setup to change from bullish to neutral over the next few days opening the chances for a test of the 53.52 level. The 52 level support is a multiple time frame match on the weekly and monthly with that being the key to determining the long term outlook of this sector.
Materials
XLB remains between the 45.5 support level and 48.13 resistances highlighted for some time now. Although the daily sentiment remains bullish, we could see a change should it break below the 45.5 support. With the monthly showing signs that this sector is not setup for a bullish trend just yet, we could see some consolidation around these zones or a break below the support could send it back down to the 42 level.
Consumer Staples:
XLP continues to be one of the stronger sectors in this volatile market. Looking at the weekly chart, 50.59 remains a key level for this sector to maintain its strength. Should price break below this, it would enter back into the consolidation it had broken out of effectively reducing the probability of creating all-time highs. The daily sentiment has changed to neutral with price entering the cloud however this will be good to watch to see what price does in the month of June.
Utilities
XLU also maintained some key supports based on the weekly chart despite experiencing some intraweek volatility. It remains unable to have a sustained breakout above the 49.14 level and its hesitation here will slowly decrease its bullish strength. The daily sentiment has also changed to neutral given the price action as this sector may be setting up for a pause given its health trend from February through April. The 47 level remains a key support to watch for to avoid this sector from swinging back down to the lows of the consolidation.
Consumer Discretionary
XLY continues to struggle to break above the 79.57 resistance level. Despite getting above it on an intraweek basis, we have not seen a weekly close. More so, this sector closed below a support and the 78.54 level is now a resistance. Looking at the daily, we also have a resistance at the same level with the sentiment changing to neutral. Should this sector hold at the resistance, we can see a major pullback to the 74 level support.
Technology
XLK continues to be caught between the 43.18 resistance and 41.36 support. With the daily sentiment change to neutral, the 43.18 level is a multiple timeframe resistance and a hold here will send this sector with momentum to the 41.36 support. A close below this level, can open up the 37.94 support as the sector will have lost majority of its bullish strength at that point in time.
Telecom
XTL looks to have made lower pivot high on the weekly holding at 58.25 with this sector showing signs of bearish momentum. With the sentiment changing on the weekly and daily, probabilities side on this sector attempting a retest of the 52.82 level. It would need to break the 56.48 resistance with vengeance to alter this outlook.
Energy
XLE continues on its journey of a major pullback on the weekly chart with the 71.26 level in its sights. We tested the 64.27 support level and this remains the key for the bullish momentum to remain. Amongst all the major sectors, this remains a highlight for its bullish strength over the past few months.
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