Sector Analysis Update – Follow up to “Market Headache or Migraine”

Follow up to “Market Headache or Migraine”

Here is an update of the sector analysis that was conducted a few weeks ago. Many sectors tested the levels we had outlined and now we have provided further levels to watch. Healthcare and Consumer Discretionary continue to remain atop our list of the most bullish sectors whereas Materials and Energy round out the bearish list. Watch for the Industrials sector to break a critical support which will align the daily and weekly timeframes for a bearish move. The technology sector is one to keep an eye on if it breaks a key resistance level to continue its bullish trend.

Sector Table sept 20

Healthcare:

XLV weekly sept 20

XLV daily sept 20

Above are the updated weekly and daily charts for the Health Care sector respectively. The 74.02 resistance remains the critical level that controls the long term sentiment of this sector.

Consumer Discretionary:

XLY weekly sept 20

XLY daily sept 20

Above are the updated weekly and daily charts for the Consumer Discretionary sector respectively. We retested the multiple time frame resistance of 77.89 last week however we did not close above it. Price needs to close above this level to continue the long term bullish trend.

Technology:

XLK weekly sept 20

XLK daily sept 20

Above are the weekly and daily charts for the Technology sector. Price held the minor support that was highlighted and retested our minor resistance level that was outlined at 41.42 but did not close above it. The critical resistance remains at 42.31 to continue the bullish trend.

Financials:

XLF weekly sept 20

XLF daily sept 20

Above are the weekly and daily charts for the Financials sector. The timeframes have yet to sort out the conflict between them with the higher timeframe being bearish and the daily being bullish. This sector may be a worthwhile play only once price provides us with an assertive direction.

Consumer Staples:

XLP weekly sept 20

XLP daily sept 20

Above are the weekly and daily charts for the Consumer Staples sector. Price spiked up to the resistance of 48.59 but held the critical level of 47.33 by end of the week. The signs continue to point towards this sector being bearish however price needs to begin to break supports prior to beginning a trend.

Industrials:

XLI weekly sept 20

XLI daily sept 20

Above are the weekly and daily charts for the Industrials sector. This continues to show signs of being bearish. Price needs to break the support of 49.72 which will sync the daily and weekly timeframes for continuation of the bearish move.

Telecom:

XTL weekly sept 20

XTL daily sept 20

Above are the weekly and daily chart for the Telecom sector. Price continues to hold the key resistance level of 55.71 and needs to break the 54.32 support to continue with its bearish move. A break of that key support will create a high probability of retesting the pivot low at 53.

Utilities:

XLU weekly sept 20

XLU daily sept 20

Above are the weekly and daily charts for the Utilities sector. We retested the key multiple timeframe resistance of 43.42 and closed below the level by the end of the week. Price needs to break the support of 40.59 to initiate a long term bearish trend otherwise this sector may begin to consolidate.

Materials:

XLB weekly sept 20

XLB daily sept 20

Above are the weekly and daily charts for the Materials sector. This sector has commenced a bearish trend on both timeframes. A break below the 41.52 support level will allow the trend to continue further with a high probability of getting to 39.40.

Energy:

XLE weekly sept 20

XLE daily sept 20

Above are the weekly and daily charts for the Energy sector. Price is still maintaining its range of 62.75 and 66.76 as price held the weekly resistance. Until the support of 62.75 is not broken, traders should not expect a retest of the 59.20 level. Short term this sector continues to remain bearish however the long term sentiment based on the monthly chart remains to be neutral until we break the support level highlighted.

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About the Author Maneshkumar Patel