The following is the sector analysis update using the SPDR ETF instruments. Entering the final month of the quarter as well as the year, it is important to understand the leader and laggards of the market. The table below shows a summary of all the sectors along with some notable changes over the past quarter in terms of sentiment.
Consumer Discretionary
XLY remains one of the outperforming sectors among its peers creating all-time highs at 81.9. The weekly and monthly charts below continue to exhibit great bullish strength with the daily timeframe support of 79.57 being the key to avoid a pullback. This could be a leader for the much anticipated Christmas rally.
Technology
XLK also remains among the top sector performers. The weekly and monthly charts remain in strong bullish trends with the daily holding a key support of 43.42. A break above the 44.58 resistance could begin a healthy move of the Goliaths this sector tracks. 41.54 remains the long term support to watch.
Healthcare
XLV continues to hold the resistance of 72.11 on the weekly and monthly timeframes with the daily starting to lose strength in its bullish trend. Until we don’t see a break above this level, we will not be adding any more healthcare names – they should already be in profit by now.
Financials
XLF tested the key resistance level of 24.88 that was highlighted earlier however has yet to close above it on the daily or weekly timeframe. The daily is now at a critical junction to decide where this will take the XLF as it has attempted to break the resistance twice. Similarly, a break below the 24.04 support will send this for a major pullback on the daily timeframe.
Consumer Staples
XLP has been a great performer testing the key levels that we had highlighted. Price held the 46.53 level and took off for the month of October. The key resistance level for this is now 50.43 and a sustained breakout above this level could be one to watch. Should it continue to consolidate around the current price, probabilities of holding this consolidation high will slowly begin to increase.
Industrials
XLI bucked the bearish momentum it had and broke key resistance levels of 51.18 and 52.94 that were previous highlighted and tested the resistance of 55.33 and held it. This sector is showing signs it could enter a consolidation on the weekly timeframe. The major high of the consolidation could be the 56.58 level with only a close above this, will we be able to assess probabilities of breaking out long term.
Utilities
XLU continues to swing in its messy consolidation. Probabilities remain tilted to this sector breaking to the downside with confirmation being a close below the 41.34 to further assess the daily, weekly and monthly timeframes at that point.
Materials
XLB took a break from its bearish trend pulling back to the key resistance level of 45.5 that was highlighted earlier. This sector is at a critical junction to decide whether it will hold here and begin a long term retest of the pivot which would be back down to the 40 level or break this 45.5 level and attempt a test of the 48.13 resistance. The sector remains on our watch-list to determine what happens and accordingly look for individual plays that follow the underlying sector trend.
Energy
XLE also followed suit by going through a minor pullback on the monthly timeframe to the 71.2 resistance level that was highlighted earlier. Price held this level on the weekly and monthly timeframe and has begun to reverse off it testing the support of 64.57. It will be interesting to watch what happens here as a break of this level could send this sector to retest the pivot lows of August 2015 close to the 59.19 level.
Telecom
XTL followed suit in pausing from its bearish trend however this sector returned back into its consolidation based on the weekly timeframe. Price broke the 55.15 level that was highlighted earlier, attempted a retest of this and then further continue its bullish strength. The sector shows signs it could retest the high of the consolidation with the next level to watch for being 59.56 however we will need the daily timeframe to setup a confirmation prior to this occurring.
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