Overtime

Sector check-up

Good morning,

This week’s Overtime covers the current technicals for all 11 sectors using the sector SPDR ETFs.

While keeping the big-picture trend in mind is always important, today we’re taking a more short-term look.

I’m also releasing this report today because I want this to be a helpful guide as we navigate a number of market moving economic reports, including PPI tomorrow, CPI on Wednesday and retail sales on Thursday.

A theme we saw in last week’s Stock Trends report was key stocks getting turned away at their very first resistance level. That will be the most important thing to watch in the charts below because any rally should be viewed with skepticism until we’ve taken out at least one resistance level to the upside.

In case the reaction to those reports disappoints, I’ll also highlight key support levels.

Let’s get into it.

*Charts are ordered by proximity to their 52-week high, a rough approximation for relative strength since the correction began.

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XLP: Consumer Staples

XLP has chugged steadily higher in the face of the market correction and has held above previous long-term resistance of $78. Good chart in absolute terms but be careful making too much of the relative chart with the 200-DMA still downward sloping.

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XLRE: Real Estate

Some people consider real estate defensive, I do not. It almost never outperforms in market corrections, and I believe it’s outperformance recently is a sign that the interest rate decline is more good than bad. XLRE is holding its long-term breakout, held up better than I would have expected amid last week’s bounce in rates and should see new highs soon. First resistance is recent highs at $42.30.

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XLV: Healthcare

First support for XLV is $145.54 but I doubt we’ll see it. The market correction has done little to deter healthcare’s breakout from a 5-month base.

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XLU: Utilities

XLU just hit a YTD high vs. the S&P 500 and is riding a steep uptrend line from its June lows. A move below $72 would break that uptrend line while $75.56 is tactical resistance.

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XLC: Communication Services