Sector Watch4/2/24 Sector Watch:
XLK Technology
XLE Energy
XLV Health Care
XLF Financials
XLB Materials
XLY Consumer Discretionary
XLU Utilities
XLRE Real Estate
Communication Services XLC, Consumer Staples XLP, Industrials XLI.
XLK trade ideas
$XLK: 195 Has MomentumTech sector ETF AMEX:XLK is showing incredible resilience following TSM earnings which is currently leading the market. I believe over the intermediate term we will see AMEX:XLK push to new highs especially with NASDAQ:AAPL trying to carve out a bottom. The green line below is from the previous trade we made which was a success and is provided in the links below...Good luck traders
The Mute SpeakerPrices never lie. Price is everything.
Time however always lies. That's "Theory of Relativity 101".
Time stretches and narrows based on boredom, psychology, speed.
By taking time out of the equation we transform a news piece into a literature book.
Timeless charts are the past, the present and the future.
They don't expire.
Unlike candles with specific expiration date.
Linebreak charts are a portal into the Minecraft world.
They serve an important purpose. To dictate/confirm price trends/movements.
To see these charts, you must imagine them.
We live inside a fake time dimension. We cannot escape it, just like pacmac cannot escape its 2D world. The only thing we can do is image an eternal time.
Imagine a future of expensive oil.
Imagine an eternal oligarchy of the Big Coin ...
... and the Big Brands.
The few (DJI) shall beat the many (SPX).
China has become a parasite on its territories.
Let us welcome the US Industrial Revolution ...
... and the rebirth of the Japanese economy
Imagine all the people.
Tread lightly, for this is blocky ground.
-Father Stevegory.
Manic Technology RallyCurrently only one of the eleven SPDR Sector funds is making a new all-time high. That’s the Technology sector (XLK). This is a huge bearish divergence!
From XLK’s October 2022 bottom it has formed an extended Elliott Impulse pattern.
The manic rally since its 10/26/23 bottom appears to be the final phase – Intermediate wave (5).
XLK could soon reach an important top, which could signal the next bear market for U.S. stocks.
Despite recession signals, technology just made a 3 month highThe world economy is facing economic slow down which has not yet affected US markets or the US economy. The recession warning indicator (top section on the chart) is hitting 100%.
The 2yr-10yr bonds rates are still inverted and the FED is determined to crush inflation before it adjusts rates. That's all uncertain but significant headwinds are present.
Looking at the main price chart showing the technology ETF (ticker: XLK), it has just made a new 3 month high. It would be great to see XLK now consolidate between $170 and $177 and then retest the 20 week moving average and bounce up closing a week above $170 before it then gets up above $177. This way we'd have a clear higher low which would give early confirmation that we've broken the downtrend that started after the July 2023 high.
From there, I'll be looking to see if it can reach all time highs.
Despite that bullish view, I think the US markets may merely be in a short term uptrend.
These uptrends can be supercharged whenever there are a lot of short sellers who are getting wrecked by these fast moves to the upside.
But I am just as willing to believe there will be similarly harsh drops to the downside if people are leveraging up in their "Buy the dip" frenzy and if the general market sentiment swings too rapidly away from "Fear" into "Greed".
By it's nature, the market is a fluctuating mechanical beast that is attracted to liquidity (pools of money that are on the wrong side of the current market direction). Whenever liquidity gets released rapidly then we get dramatic shifts in price. These liquidity releases occur when investors and traders (either short or long) capitulate or get wrecked. The mechanical beast will always hunt stop losses and move against the majority of traders. In this way the market works best when it wrecks both the shorts and the longs until they give up and new money comes in that isn't sensitive to capitulating. But right now we're in a market where every long-only investor should have at least one eye on the recession warnings and short only investors should not believe their own bs regarding the timing they hope to see the market capitulate.
Based on this theory of the market, it seems very possible for XLK and perhaps some other sectors to reach all time highs just ahead of a major downtrend. But it will not come when everyone is ready and positioned for it.
The macro economic picture is mixed.
The FED hasn't raised interest rates and is waiting for the economy to either start to weaken or force the FED to raise short term rates further. US unemployment is just starting to tick up after being below historical trend. US private debt remains low. US government debt (treasury bills and bonds) are continuing to be bought so, in theory, the US might squeak through this period. I doubt it though as history is against that happening.
So for now, I continue to hold my longs from the October lows. I will look to take 50% profit on XLK near to $180 and otherwise be guided on how the market reacts as it reaches resistance points and forms new higher highs or lower lows.
I'll definitely be thinking about the risk free rate of earning over 4% in cash in almost any place I look. If we don't confirm an uptrend that's going to be very appealing.
Risk management:
If prices spike back down and make new lows below the October lows then I will sell my positions on any retraces and just wait to see what happens and look for when a new uptrend starts to emerge after the sideways chop and because I hope to avoid any significant downtrend.
Tech stock Vs Energy stocks. The Competition for Decades This is an education-style publication where the main graph is a comparison (ratio) between two ETFs (funds) managed by State Street Global Advisors Corporation, the creator of the world’s first ETF (well-known in nowadays as AMEX:SPY ) and an indexing pioneer.
The first one ETF is The Technology Select Sector SPDR Fund, AMEX:XLK .
👉 AMEX:XLK seeks to provide investment results that provide an effective representation of the Technology sector of the S&P 500 Index SP:SPX .
👉 AMEX:XLK seeks to provide precise exposure to companies from Technology hardware, storage, and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components.
👉 AMEX:XLK is a place where securities of American World-known Technology companies like Apple Inc. NASDAQ:AAPL and Microsoft Corp. NASDAQ:MSFT , like Nvidia Corp. NASDAQ:NVDA and American Micro Devices NASDAQ:AMD , like Cisco Systems Inc. NASDAQ:CSCO and Adobe Inc. NASDAQ:ADBE meet together.
👉 In contrast with other Technology-related ETFs like NASDAQ:QQQ (Invesco Nasdaq 100 Index ETF) or NASDAQ:ONEQ (Fidelity Nasdaq Composite Index ETF), stocks allocation in AMEX:XLK depends not only on their market capitalization, but also hugely on Technology industry allocation (like software, technology hardware, storage & peripherals, semiconductors & semiconductor equipment, IT services, communications equipment, electronic equipment instruments & components).
That is why allocation of Top 3 holdings in AMEX:XLK ( Microsoft Corp. NASDAQ:MSFT , Apple Inc. NASDAQ:AAPL and Broadcom Inc. NASDAQ:AVGO ) prevails 50 percent of Funds assets under management.
👉 Typically AMEX:XLK holdings are Growth investing stocks.
The second one ETF is The Energy Select Sector SPDR Fund, AMEX:XLE .
👉 AMEX:XLE seeks to provide investment results that provide an effective representation of the energy sector of the S&P 500 Index SP:SPX .
👉 AMEX:XLE seeks to provide precise exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries.
👉 AMEX:XLE allows investors to take strategic or tactical positions at a more targeted level than traditional style based investing.
👉 AMEX:XLE is a place where stocks of American World-known Oil companies like Exxon Mobil Corp. NYSE:XOM and Chevron Corp. NYSE:CVX , like EOG Resources Corp. NYSE:EOG and ConocoPhillips NYSE:COP , like Valero Energy Corp. NYSE:VLO and Phillips 66 NYSE:PSX meet each other.
👉 Weight of Top 3 holdings in AMEX:XLE (Exxon Mobil Corp. NYSE:XOM , Chevron Corp. NYSE:CVX and EOG Resources Corp. NYSE:EOG ) prevails 45 percent of Funds assets under management.
👉 Typically AMEX:XLE holdings are Value investing stocks.
The main graph represents different stock market stages of work
🔁 Early 2000s, or post Dot-com Bubble stage, that can be characterized as Energy Superiority Era. There were no solid Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates TVC:TNX , TVC:TYX as well as U.S. Federal Funds Rate ECONOMICS:USINTR were huge like nowadays. Crude oil prices TVC:UKOIL , TVC:USOIL jumped as much as $150 per barrel.
The ratio between AMEX:XLK and AMEX:XLE funds collapsed more than in 10 times over this stage.
🔁 Late 2000s to early 2010s, or post Housing Bubble stage, that can be characterized as a Beginning of Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates TVC:TNX , TVC:TYX as well as U.S. Federal Funds Rate ECONOMICS:USINTR turned lower. Bitcoin born.
The ratio between AMEX:XLK and AMEX:XLE funds hit the bottom.
🔁 Late 2010s to early 2020s, or post Brexit stage, that can be characterized as a Continuation of Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates TVC:TNX , TVC:TYX as well as U.S. Federal Funds Rate ECONOMICS:USINTR turned to Zero or so. Crude oil turned to Negative prices in April 2020 while Bitcoin hit almost $70,000 per coin in 2021.
Ben Bernanke (14th Chairman of the Federal Reserve In office since Feb 1, 2006 until Jan 31, 2014) was awarded the 2022 Nobel Memorial Prize in Economic Sciences, jointly with Douglas Diamond and Philip H. Dybvig, "for research on banks and financial crises", "for bank failure research" and more specifically for his analysis of the Great Depression.
The ratio between AMEX:XLK and AMEX:XLE funds becomes great and respectively with monetary stimulus hit the all time high.
🔁 Early 2020s, or post Covid-19 Bubble stage, that specifically repeats early 2000s Energy Superiority Era. There is no again Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates TVC:TNX , TVC:TYX as well as U.S. Federal Funds Rate ECONOMICS:USINTR are huge nowadays like many years ago. Commodities prices like Wheat CBOT:ZW1! , Cocoa ICEUS:CC1! , Coffee ICEUS:KC1! , Crude oil prices TVC:UKOIL , TVC:USOIL jump again to historical highs.
The ratio between AMEX:XLK and AMEX:XLE funds is fading to moderate levels that can be seen as 200-Month simple moving average.
💡 In a conclusion.. I wonder, how the history repeats itself.
This is all because markets are cyclical, and lessons of history always still remain unlearned.
💡 Author thanks PineCoders TradingView Community, especially to @disster PineCoder for its excellent and simple script Quantitative Easing Dates .
Based on this script, Easing Dates are highlighted at the graph.
XLK - Support DefendedBulls stepped up and bought the initial dip in XLK
If this market is to have nay chance at a rally, tech will need to participate.
So far we now have a weekly Dojo candle that allows us to trade against.
If a retrace lower occurs next week I anticipate buyers to step up unless Yields or the dollar have a significant move to the upside.
XLK QQQ Down -10% Since the last BIG Short idea | Whats NEXT?AMEX:XLK Weekly structure changed, and the price is in a huge volume gap. Weekly head and shoulder breakdown and pops gonna get sold back down IMO.
First target hit and is now aggressively approaching the big target, which is the massive volume node around 150 🎯
XLK - Bullish Weekly CrossFor the third time in XLK price history we have had a crossover of the 50 weekly MA & 100 Weekly MA.
the previous 2 times coming out of the Dot com crash and GFC when this happened it resulted in a quick multi week double digit rally.
Will this rally happened again?
XLK could rally while other aspects of the market rollover. Why? simply the cash moats of some of the Mega Cap companies insulate them more from rising yields.
Im expecting a bounce off the support level.
XLK Weekly (rocky top, you're still home sweet home to me)From Covid low (red A) on 3/2020 to all time high on 12/27/2021 (green A), we retraced not quite .618 to green B at .588. Notice that XLK topped in December 2021 and led the general market (SPY) decline that happened in January 2022.
We have since set a new high at green C at 181.46. This is 6.9 pct higher than prior high of 12/2021, but close enough to be concerned about a double top starting to form. We are also seeing the beginning formation of a broadening wedge.
Most recent high of 181.46 failed to hold support at the 1/1 square Gann ray, and looks to be seeking prior pivots (circles 163.65, -9.8% off high, and 151.86, -16.3% off high). A 50% retrace off the high would put us at green D and at a low volume node around 145 - 147. Should we reach this level, sure enough we have broken both pivot supports and we are well on our way to a true double top base forming around the POC (yellow line). We don’t want to go there.
Personally I’m expecting an intermediate bottom to form at the second pivot circle or at the green D around late December to early January, and then will take another look from there.
Note that on the monthly chart we crossed the 12 month SMA in March, and it is angling upward, so we cannot say that “bear” word just yet. Nevertheless, I expect an eventual test of the 12 month line (which is very near that green D on this chart).
XLK Daily Chart UpdateLikely further selling, 7% off the most recent high of 181.46, to 168.76. This would take XLK to the lower part of the bullish forward Ichimoku cloud (not shown), and below the 50 day exponential moving average (not shown). There is still bull here, should it reverse back upward, since it would be inside the upward regression channel drawn from 10/13/22 low (black lines). Target in this scenario would be a new high around 185.12, or 1.27 Gartley extension.
Another scenario would be a break of the 7 % line and the regression channel -- a further decline into a dangerous area with little support (yellow rectangle). In this case, we are looking at a 12% decline and a low of 159.56, and a reversal in the making off the regression channel.
