Here is an update on the sectors after the Fed announcement which is likely the last major market moving news event on 2015. Despite the high volatility on an intra-week basis, it is important to note where price action closes on a weekly time frame which is a better gauge of long term sentiment.
XLY did not hold the 79.57 support that was outlined and attempted a test of the 76.9 level. The intraweek volatility led to major swings with probability indicating to get to the daily support level. A break of this will put the 73.96 level in sights which is not good for the bullish market view given the consumer discretionary sector has been a leader thus far.
XLK looks to have the 41.54 support level in its sights and a hold here being the key determinant in it having any chance of a bullish move. Although we had a large up move during the week, by Friday’s close price was not able to hold the support. The 41.54 is a critical level to watch as should the tech sector close below on the weekly timeframe, it could drastically reduce its bullish momentum and begin to setup some bearish plays.
XLV continues to hold the resistance of 72.11 on the weekly and monthly timeframes with the daily starting to lose strength in its bullish trend. Until we don’t see a break above this level, the bullish trend cannot continue.
XLF did exactly what was anticipated as a break below the 24.04 level sent the sector to the 23.48 support triggering a major pullback on the daily timeframe. This severely dented the long term bullish strength of this sector. A bullish continuation can only occur after this sector can overcome the 24.04 level. In the meanwhile, continuous price action around this current level could open up the 22.07 support.
XLP is still one to watch for if a sustained breakout about the 50.43 level can hold. The daily timeframe was able to overcome this however it closed below it on a weekly basis. Should it continue to consolidate around the current price, probabilities of holding this consolidation high will slowly begin to increase.
XLI looks to have ran out of steam on its short term bullish move up over the past few weeks as it countered its bearish momentum. The 55.33 resistance remains the key level to overcome for this to have a change in any long term sentiment. Short term the support of 51.19 is within its sights and the next level to watch for.
XLU continues to swing in its messy consolidation. Probabilities remain tilted to this sector breaking to the downside with confirmation being a close below the 41.34 to further assess the daily, weekly and monthly timeframes at that point.
XLB was able to hold its 45.5 resistance level and broke 2 key supports at ended the week testing the 42.46 level. This sent the daily timeframe into a major pullback. The daily timeframe will be key to watch for a setup to play it down to the long term target support of 40 which was the previous pivot low. The sector remains on our watch-list to determine what happens and accordingly look for individual plays that follow the underlying sector trend.
XLE moved as anticipated as a break below the 64.57 level sent this sector down to the major support of 59.19 – the previous pivot low. A break here could send this to test lows going back to 2011 and 2010 respectively. Its momentum remains strong to break here but a confirmation is required. Watch for individual names to break key supports and play the underlying bearish strength of the sector.
XTL was unable to retest the high of the consolidation and went for a retest of the 55.15 support level. Price did close below the cloud on the weekly timeframe changing the sentiment from neutral to bearish. However, this continues to remain within its consolidation pattern.
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