The Relative Rotation Graph for US sectors shows a remarkably steady rotation for the Real-Estate sector. This is a daily RRG showing a 15 day tail, or three weeks. Yesterday XLRE crossed over into the leading quadrant and is now the only sector inside the leading quadrant at a solidly positive RRG-Heading.
Real Estate Select Sector SPDR Fund - XLRE
The daily price chart for XLRE shows a steep rally from its late December low to current levels where it is running into overhead resistance. $34.10 (or $34.50 unadjusted) is the level to watch for a break higher. A break will push the Real-estate sector to new all-time-highs which usually is a good sign and accelerates an upward move.
However, there is heavy overhead resistance looming at the level of the early December peak. A similar situation is visible in the relative strength line where the market is pushing against horizontal resistance coming off two prior highs.
This makes the current rally vulnerable at these levels, XLRE really needs to break beyond these overhead resistance levels and keep momentum, both price, and relative, to continue this move.
It is one of these make or break situations; Taking out resistance will very likely cause a further rally. Failing to do so will end in a peak against resistance and a corrective move lower.
This makes XLRE a chart that should not be ignored at the moment.
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Julius de Kempenaer | RRG Research
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About the author:Julius de Kempenaer is the creator of Relative Rotation Graphs™. This unique method to visualize relative strength within a universe of securities was first launched on Bloomberg professional services terminals in January of 2011 and was released on StockCharts.com in July of 2014.
After graduating from the Dutch Royal Military Academy, Julius served in the Dutch Air Force in multiple officer ranks. He retired from the military as a captain in 1990 to enter the financial industry as a portfolio manager for Equity & Law (now part of AXA Investment Managers).