Don't Ignore This Chart!

Defensive Sectors Hit Moment of Truth


The HealthCare SPDR (XLV), Consumer Staples SPDR (XLP) and Utilities SPDR (XLU) are lagging the broader market in 2016, but they are now challenging their 200-day moving averages with bounces this month. The chart below shows these three sectors peaking in July-August and moving lower the last four to five months. Despite weakness since summer, these three bounced in December with staples and utilities leading the nine sectors this month. At this point, I would consider this a bounce within a downtrend because we have yet to see resistance breaks. The lower windows show XLU and XLP trading near resistance levels marked by the recent peaks and the 200-day SMAs. The top window shows XLV just below its 200-day. These three are clearly at a moment-of-truth. Breakouts above the resistance zones would be bullish, while failures would keep the downtrends intact.  

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at 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. Learn More
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