A lot of sector movements last week. Energy’s drop is supported by the charts and we do not see evidence for it to return to the top ranks. Healthcare sneakily moving up to the 3 spot, this looks sustainable based upon the weight of the evidence. Consumer staples mean reverting and moving up to the 4 spot, this may not seem “right” in a risk-on mode but this may just be a product of the other sector’s poor performance propping it up a little bit.


Market: XLF (Financials ETF)

Reason for observation: Lack of strength

Short-term bias: Bearish

Long-term bias: Bullish

Financials hovering near lows made back in April certainly is not bullish for the sector. A breakdown is certainly possible in the near term. Avoid buying names in Financials for the time being.

Market: XLY (Consum. Disc. ETF)

Reason for observation: Slide along the bands trend

Short-term bias: Bullish

Long-term bias: Bullish

Runaway uptrend in XLY. Risk-on is clear by this chart, money flow into discretionary has been non stop for the past 2 weeks.

2 sectors, cosum. disc. and tech with severe outperformance over the market. Compared to energy and financials which are 2 sectors that’s relative performance is dropping fast.

Spread between discretionary and staples still lingering near highs. This is bullish.