All sectors are down over the last two months, but some are down less than others. Of the nine sector SPDRs, the Consumer Staples SPDR (XLP) and the Healthcare SPDR (XLV) are holding up the best. Relative strength in these two defensive sectors confirms that the market is currently in risk-averse mode. The chart below shows the Healthcare SPDR declining the last five weeks with a falling channel. This channel defines the downtrend and prices need to break the channel to reverse the downtrend. Even though we have yet to see a reversal, there are signs of support as the ETF nears the August consolidation and the 50% retracement. Also notice that XLV led the sectors on Friday with the biggest bounce - although the bounce was rather modest. The indicator window shows the Commodity Channel Index (CCI) moving lower since early September. A break above the red trend line and a move into positive territory would signal a bullish reversal in momentum.
Click this image for a live chart
Click this image for a live chart
About the author:
Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London.
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