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Tuesday - May 02, 2006

Breadth Oversold for XLV

It is also worth noting that the McClellan Summation Index for the HealthCare SPDR (XLV) has become oversold for the third time in two years. The McClellan Summation Index moved below –1000 in August 2004 and October 2005. The August 2005 oversold did not mark the final low, but it did preceded a nice bounce and the McClellan Summation Index then formed a positive divergence. A positive divergence forms when the indicator makes a higher low (green line), but the ETF makes a lower high (red line). The October 2005 oversold reading marked an important low and the bull signal came with a move back above –1000. The McClellan Summation Index is currently below –1000 and it would take a move above this level to trigger a bull signal. This chart is updated every day at ETFInvestmentOutlook.com (click here)

By Arthur B. Hill - Tue 02-May-06 at 07:32AM in Sectors
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XLF Forms a Bearish Engulfing

The Finance SPDR (XLF) opened strong on the day and closed weak to form a bearish engulfing pattern. Such a sharp decline after the breakout is negative, but this is not enough to negate the breakout. Broken resistance around 33.3 turns into support and the stock remains within a rising price channel. A move below the late April lows (32.7) would confirm the bearish engulfing pattern and I would then become concerned because Finance is the largest sector in the S&P 500.

By Arthur B. Hill - Tue 02-May-06 at 07:31AM in Sectors
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Tuesday - April 18, 2006

Finance SPDR (XLF) Holds Support

We have already see breakdowns in interest rate sensitive ETFs such as the Utility SPDR (XLU), Homebuilders SPDR (XHB) and REIT iShares (ICF). However, the Finance SPDR (XLF) held support from its March low and this is keeping the S&P 500 relatively firm. The stock consolidated the last three days and the next move will heavily influence the S&P 500. A break below 32.3 would be bearish and a break above 32.8 would keep the bull alive.

By Arthur B. Hill - Tue 18-Apr-06 at 10:28AM in Sectors
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Thursday - April 06, 2006

XLY Following XLE Up

It is also possible for the Consumer Discretionary SPDR (XLY) to advance along with the Energy SPDR (XLE). Although less likely, it is happening as XLY broke falling flag resistance with two long white candlesticks and the move reinforces trendline support. Technically, XLY has yet to make it above last week’s high and I would like to see follow through above 34.05. The breakout in this cyclical sector buoyed the S&P 500.

By Arthur B. Hill - Thu 06-Apr-06 at 10:32AM in Sectors
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XLE Holding Breakout Too

What’s bearish about this chart? Same answer: nothing. XLE formed a falling wedge and held the May trendline. The breakout at 55 is bullish and the bulls have nothing to fear as long as 54 holds. Notice that the Nasdaq is stronger than XLE and it is possible for both the Nasdaq and XLE to advance at the same time.

By Arthur B. Hill - Thu 06-Apr-06 at 10:32AM in Sectors
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Wednesday - April 05, 2006

XLU Forms Bullish Engulfing

The interest rate sensitive Utility SPDR (XLU) also bounced with a bullish engulfing Tuesday. This is by far the weakest sector and the bounce comes after a support break last week. Was this support break an over reaction? The stock certainly became oversold as 10-day RSI moved below 30. A long position here would be a bottom picking exercise and it would take a move above 31.5 (follow thru) to confirm the bullish engulfing pattern.

By Arthur B. Hill - Wed 05-Apr-06 at 02:49PM in Sectors
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Finance Pops to Challenge Flag

Strength in the Finance sector powered the S&P 500 and Dow on turn around Tuesday. The Finance SPDR (XLF) formed a falling flag and then stabilized around 32.5. An inverted hammer formed on Monday and a long white candlestick on Tuesday. The move was enough to break the upper flag trendline and this is quite positive for the S&P 500 and NYSE Composite, two finance heavy indices. The move also reinforces support from the March low and this is the level to watch for a break down.

By Arthur B. Hill - Wed 05-Apr-06 at 02:49PM in Sectors
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Tuesday - April 04, 2006

Cyclicals Lead the Way Lower

Weakness in the Dow and S&P 500 stems from weakness in the Consumer Discretionary SPDR (XLY), Finance SPDR (XLF) and HealthCare SPDR (XLV) over the last two weeks. XLY opened strong and closed weak yesterday to form a long black candlestick and remain within the falling flag (magenta trendlines). The stock failed to breakout last week and a move above 34.05 is needed to revive the Dow and S&P 500.

By Arthur B. Hill - Tue 04-Apr-06 at 10:42AM in Sectors
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Friday - March 31, 2006

Finance Weighs on the Big Boys

Weakness in the Finance sector is weighing on the broader market. The Finance SPDR (XLF) led the broad market higher from mid January to mid February and then formed a gravestone doji and gap down in mid March. XLF continued lower and formed a falling flag over the last few weeks. Finance is the biggest sector in the S&P 500 and the price weighted Dow also features a number of high priced Finance stocks. As long as the falling flag holds (33), weakness in this key group will weigh on the S&P 500 and Dow.

By Arthur B. Hill - Fri 31-Mar-06 at 05:18AM in Sectors
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Thursday - March 23, 2006

XLK Getting Big Challenge at Resistance

The Information Technology SPDR (XLK) is getting a battle with resistance. The stock formed a dark cloud last week and a shooting star this week. Despite a weak open, XLK recovered on Wednesday and this shows resilience to keep the uptrend alive. Medium-term support is set at 21.5 and a move below this level would reverse the medium-term uptrend.

By Arthur B. Hill - Thu 23-Mar-06 at 09:29AM in Sectors
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XLF Firms at Trendline Support

The Finance SPDR (XLF) firmed right at trendline support yesterday and this kept the S&P 500 buoyant. Minor support is now at 32.7 and this is the level to watch for signs of weakness in XLF and SPX.

By Arthur B. Hill - Thu 23-Mar-06 at 09:28AM in Sectors
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XLY Holding Breakout - barely

The Consumer Discretionary SPDR (XLY) broke triangle resistance and this breakout is getting a challenge over the last few days. The upper triangle trendline extension turns into support and this breakout is OK as long as 33.6 holds. A move below 33.6 would question the breakout and put this key sector back in the trading range.

By Arthur B. Hill - Thu 23-Mar-06 at 09:27AM in Sectors
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Thursday - March 09, 2006

Consumer Staples Lead the Way

The day belonged to the Consumer Staples SPDR (XLP) as the stock surged for the second day on good volume. CVS, TAP, CL, ACV and WAG led the way higher. This shows that money is moving into relative safety.

By Arthur B. Hill - Thu 09-Mar-06 at 06:33AM in Sectors
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Wednesday - March 08, 2006

Consumer Discretionary Weakens

This is not a pretty picture. The Consumer Discretionary SPDR (XLY) failed to move above resistance at 34 and gapped below the rising wedge trendline. The stock remains above consolidation support at 32.8, but further weakness below this level would be bearish for the sector and the S&P 500.

By Arthur B. Hill - Wed 08-Mar-06 at 06:08AM in Sectors
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Staples Strengthen

While money moved out of the Consumer Discretionary SPDR (XLY), it moved into the Consumer Staples SPDR (XLP) as the stock opened weak and closed strong. The February breakout is holding and broken resistance around 23.4 turned into support. This is a classic defensive maneuver as money moves from cyclicals to staples.

By Arthur B. Hill - Wed 08-Mar-06 at 06:08AM in Sectors
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Tuesday - March 07, 2006

Utilities Feel the Heat

The Utility SPDR (XLU) felt the pressure of higher interest rates with a sharp decline over the last four days. The stock broke trendline support and finished just above double top support at 31.3. A move below this level would reverse the current uptrend and project further weakness towards 29.

By Arthur B. Hill - Tue 07-Mar-06 at 07:10AM in Sectors
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Finance Still Holding Up

The Finance SPDR (XLF) also weakened over the last few days, but remains near its February highs. The stock broke diamond resistance in mid February and moved to a new high above 33. With the reaction high at the end of February, I drew a broadening formation, which is a bearish pattern. These patterns reflect both indecision and volatility with the higher highs and higher lows. They are difficult to play and most of the time it is better just to stay away.

By Arthur B. Hill - Tue 07-Mar-06 at 07:09AM in Sectors
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Monday - February 27, 2006

Industrials, Finance and the Dow Diamonds

The Wall Street Journal Reports:

Financial stocks -- not energy stocks -- dominate the Standard & Poor's 500-stock index. Banks, stock brokers, insurance companies and the like make up 21% of the index's market value. Technology is next, followed by drug and other health-related stocks, according to data compiled by Birinyi Associates in Westport, Conn. Energy stocks, for all their gains, come in sixth, with 9%. And that is good news for the stock market, because financial stocks have longer coattails. When oil stocks are dominant, as they were in the 1970s, it is because oil prices are so high that other parts of the economy suffer. When financials are strong, it is because inflation and interest rates are low. That is great news for banks and insurance companies because it holds down their cost of obtaining funds. And low interest rates hold down costs and boost profits at most other companies, too. That is why investors love to see financials lead the market.

This chart shows the Finance SPDR (XLF) breaking diamond resistance over the last two weeks and the breakout is bullish until proven otherwise. The Finance sector is not only important for the S&P 500, but it also plays a key role in the Dow Industrials. AIG, AXP, C and JPM are key components in the Dow and the Finance SPDR (XLF).

In addition to XLF, the Industrials SPDR (XLI) broke diamond resistance this month.

Looking at the Dow Diamonds (DIA) pattern, it is clear that the Industrials and Finance sectors are quite important to the Dow. All three have similar patterns (diamond breakouts). The Finance and Industrials sectors should be watched closely for clues on Dow direction.

By Arthur B. Hill - Mon 27-Feb-06 at 07:09AM in Sectors
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Thursday - February 16, 2006

Finance SPDR (XLF) Breaks Diamond Pattern

Just like the Dow a few days ago, the Finance SPDR (XLF) broke above the upper trendline of a diamond formation. This is a bullish development, provided it holds. Should the breakout not hold, look for a move below the February low to turn this big sector bearish.

By Arthur B. Hill - Thu 16-Feb-06 at 06:05AM in Sectors
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Consumer Discretionary SPDR (XLY) Surges off Support

I am also seeing leadership in the Consumer Discretionary SPDR (XLY). The stock held support around 32.8 and moved above its late January high with a surge over the last six days. Retail stocks feature prominently in this sector and the breakout is positive. The larger rising wedge still looms as potential trouble, but not unless XLY breaks below its February low.

By Arthur B. Hill - Thu 16-Feb-06 at 06:04AM in Sectors
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Tuesday - February 07, 2006

The Utility SPDR (XLU) Nears Support

The Utility SPDR (XLU) has been under pressure the last few weeks as it declined to support around 31.5. The December lows mark this support zone and the Jan-Feb decline retraced 38-50% of the Oct-Jan advance. The decline looks like a falling flag and XLU formed a bullish engulfing yesterday. However, given the volatile open of these ETFs, I am not going to take this pattern seriously until XLU breaks above 32.5.

By Arthur B. Hill - Tue 07-Feb-06 at 08:32AM in Sectors
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Monday - February 06, 2006

The Consumer Discretionary SPDR (XLY) forms Rising Wedge (ETF)

The Consumer Discretionary SPDR (XLY) is stalling above key support at 32.7. The big pattern is a rising wedge, which is potentially bearish. To realize its potential though, a break below the lower trendline and late January low is required. As long as this trendline holds, the wedge is rising and the bulls get the benefit of the doubt.

By Arthur B. Hill - Mon 06-Feb-06 at 07:43AM in Sectors
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Wednesday - October 05, 2005

Healthcare Provides a Bright Spot

Seven of the top ten stocks in the HealthCare SPDR (XLV) were up on the day with ABT, WYE and LLY leading the way.

By Arthur B. Hill - Wed 05-Oct-05 at 06:06AM in Sectors
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Friday - September 30, 2005

Transports Break A Barrier

The Dow Transports formed a falling flag that found support near broken resistance. The breakout at 3670 is bullish. A move below 3650 would challenge this breakout and I would then become more cautious.

By Arthur B. Hill - Fri 30-Sep-05 at 08:15AM in Sectors
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Monday - September 26, 2005

Energy Gaps

Hurricane season is ending and gaps in the Energy SPDR (XLE) are being filled. Up gaps are bullish until they are filled. Once filled, these up gaps become exhaustion gaps. XLE has already filled two gaps with high volume on the downside and is poised to fill the third. This is still top picking territory, but recent selling pressure suggests either an extended trading range or a correction in the offing.

By Arthur B. Hill - Mon 26-Sep-05 at 06:55AM in Sectors
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Transports Firming

The Dow Transports ($TRAN) declined within a falling flag over the last seven weeks and is starting to firm. The average formed two inverted hammers and two hammers over the last four days. Take these candlesticks with a grain of salt because the Average does not have a true open based on an actual trade (it is an index/average of 20 stocks). The falling flag is typical for corrections and a break above 3670 would be quite positive.

By Arthur B. Hill - Mon 26-Sep-05 at 06:54AM in Sectors
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Thursday - September 22, 2005

XLF Confirms Bearish Engulfing

What does the Finance sector think about Fed policy? Just ask the Finance SPDR (XLF). The stock formed a bearish engulfing at resistance (16-19 Sep) and confirmed this pattern with a support break on 21-Sept. This makes for a massive failure at resistance (30) and I would expect a move lower over the next few weeks. As the biggest sector in the S&P 500 and NYSE Composite, this will undoubtedly weigh on the broader market.

By Arthur B. Hill - Thu 22-Sep-05 at 11:05AM in Sectors
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Chemicals Lead XLB Lower

We have already seen what happened to the Consumer Discretionary SPDR (XLY). The Materials SPDR (XLB) is another cyclical sector that is dependent on economic growth. Industries in the Materials sector supply the materials needed to produce the goods that Retailers in the Consumer Discretionary sector sell. These two sectors have been the weakest in the S&P 500. XLB formed a continuation head-and-shoulders over the last few months and broke neckline support. This simply affirms the downtrend that was already in place. It would take a move above 28.1 to reverse this support break and turn bullish.

By Arthur B. Hill - Thu 22-Sep-05 at 11:05AM in Sectors
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Tuesday - September 20, 2005

Finance Powers SPX

The Finance SPDR (XLF) represents the biggest sector in the S&P 500 and NYSE Composite (~20%). It is the gorilla of sectors and will likely drag the S&P 500 with it. The stock has been fairly strong lately and managed to hold its early September gains. However, the breakout at 30 remains elusive and the stock formed a bearish engulfing pattern. A move below 29.5 would confirm the pattern and lead to weakness in the S&P 500.

By Arthur B. Hill - Tue 20-Sep-05 at 05:54AM in Sectors
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Friday - September 02, 2005

XLY lags

This sector, and by extension the broader market, could be in trouble. With the lower high at 35, the big pattern looks like a triangle (blue trendlines). The red and green trendlines show the up and down swings within the triangle. After a doji in late July (red caret), XLY came down pretty hard and broke trendline support to turn the swing down. The next stop is support around 32 and it would take a move above 35 for an impressive breakout.

By Arthur B. Hill - Fri 02-Sep-05 at 03:13PM in Sectors
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Thursday - August 25, 2005

Transports At Support

The Dow Transports led the market higher in July and lower in August. The Average broke resistance at 3650 with a surge in July and this level turns into support. A falling flag formed over the last 4 weeks and this looks like a throwback to broken resistance.

An inverted hammer formed yesterday and this bullish candlestick reversal shows intraday buying pressure that failed to hold. More importantly, this provides a level to watch for a bullish breakout. A move above 3750 would break falling flag resistance and confirm the inverted hammer. This would be bullish for the Dow Transports and signal a continuation of the July advance.

By Arthur B. Hill - Thu 25-Aug-05 at 09:51AM in Sectors
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Monday - August 22, 2005

XLK at Support

In addition to the Finance SPDR (XLF), I will also be watching the Information Technology SPDR (XLK) for clues on the Nasdaq and S&P 500. The stock declined over the last few weeks and is now trading at trendline support. Broken resistance and the 50-day simple moving average confirm support around 20.6. There are lots of reasons for support and it should hold. Should XLK not hold, a break below support would be quite negative.

By Arthur B. Hill - Mon 22-Aug-05 at 06:46AM in Sectors
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XLF Consolidation

For clues on the S&P 500, turn to its biggest sector: Finance. The Finance SPDR (XLF) has been locked in a trading range the last ten days. The rising wedge trendline break was negative, but the stock stopped short of a major support break at 29.2. I am now watching the 10-day trading range for clues. A break above 30.1 is short-term bullish, while a break below 29.4 is short-term bearish.

By Arthur B. Hill - Mon 22-Aug-05 at 06:46AM in Sectors
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XLP Triangle

After a big advance late last year, the Consumer Staples SPDR (XLP) formed a triangle consolidation in 2005. The stock has been locked in a contracting range for over seven months. The July breakout attempted failed and the stock declined on high volume in August (red oval). There is a lot of support between 22.5 and 23, but long-term direction will not be established until the triangle is broken.

By Arthur B. Hill - Mon 22-Aug-05 at 06:43AM in Sectors
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Wednesday - August 17, 2005

XLK Triangle

Relative weakness in the tech sector is not healthy, but the lower wedge trendline has yet to be broken. While the S&P 500 and Nasdaq moved to new highs in August, XLK failed to exceed its Dec-04 high and has yet to break triangle resistance. The swing within the triangle is up as long as the rising wedge holds. A move below 20.5 would break this trendline and be call for further weakness towards 19.

By Arthur B. Hill - Wed 17-Aug-05 at 05:58PM in Sectors
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Friday - August 12, 2005

Sector Overview

The Finance SPDR (XLF) broke down over the last few weeks, but the Information Technology SPDR (XLK) and Consumer Discretionary SPDR (XLY) are still holding support levels. It would not take much to break support in these two key sectors and turn the tide in the S&P 500. Meanwhile, the Energy SPDR (XLE) and HealthCare SPDR (XLV) are showing good relative strength, while the Materials SPDR (XLB) is making an attempt to break free of resistance at 29. It is tough turning 30.

By Arthur B. Hill - Fri 12-Aug-05 at 11:54AM in Sectors
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Wednesday - August 10, 2005

Utilities Full Circle

What a long strange trip it’s been. The Dow Utilities peaked in Dec-00 and declined below 300 by the end of 2001. Enron was removed from the average in Dec-01, but this did not stop the decline as the energy trading fallout extended to DUK, NI, WMB and CNP. The Average reached its nadir in Oct-02 with a classic selling climax (red caret).

That was then and this is, well, December 2000 all over again. Almost three years since the low and 5 years since the high, the Average moved back above 400 last week. WOW, what now? Obviously, the Average is overbought and 400 represents resistance. Even though I am not looking for a sharp reversal or steep decline, the salad days are over and I would expect the average to move into a trading range (gray rectangle).

By Arthur B. Hill - Wed 10-Aug-05 at 10:46AM in Sectors
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Monday - August 08, 2005

IYK Gap

The Consumer Goods iShares (IYK) did not offer a safe haven on Friday as the stock gapped down and broke support. This gap follows a dark cloud pattern at the end of July and further weakness is expected.

By Arthur B. Hill - Mon 08-Aug-05 at 08:24AM in Sectors
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Friday - August 05, 2005

Sector Overview

Led by disappointing results from retail, the Consumer Discretionary SPDR (XLY) gapped down and carried the market lower. Should the Finance SPDR (XLF) join in with a minor support break, the S&P 500 is likely to stumble because Finance is the biggest sector and the Consumer Discretionary sector is the most economically sensitive. All nine sector SPDR charts are reviewed below.

Led by a gap down in the Retail HOLDRS (RTH), the Consumer Discretionary SPDR (XLY) also gapped lower and closed near minor support at 34.3. The stock was already overbought and hugging the upper trendline of the rising price channel. This limited upside potential and a move below yesterday’s low would signal the beginning of a correction with a downside target around 33.5 or the lower channel trendline

The Consumer Staples SPDR (XLP) fell back over the last few days and the pattern could evolve into a falling flag (magenta trendlines). The stock broke the gray trendline extending up from early July and this is negative, but minor support at 23.1-23.2 is still holding. A move above 23.5 would revive the bull and a move below 23.1 would favor the bears.

The Energy SPDR (XLE) closed off its intraday high and consolidated yesterday. The uptrend may be slowing, but it is still an uptrend and it would take a move below 47 to start considering a correction.

The Finance SPDR (XLF) gapped down and formed a doji. This sector remains a concern and appears to be weakening from the prospect of rising interest rates. A move below consolidation support at 29.9 would be bearish.

The HealthCare SPDR (XLV) pulled back yesterday and there is no change in the overall picture. The uptrend remains in place and it would take a move below minor support at 31 to start thinking otherwise.

The Industrials SPDR (XLI) pulled back from resistance over the last 5-6 days and the decline looks like a falling flag (magenta trendlines). A move above 30.5 would signal a continuation of the July advance. Further weakness below 30 would be deemed excessive and turn my bias bearish.

The Materials SPDR (XLB) made a breakout bid yesterday, but closed weak to form a big bad bearish engulfing near resistance. This is clearly negative, but not bearish just yet. A move below Monday’s low (28.4) would start filling the gap and a decline below 27.7 would turn my stance bearish.

Now it’s broken, now it’s not. The Information Technology SPDR (XLK) broke flat flag resistance on Wednesday, but fell back on Thursday. This is a minor negative, but not enough to turn short-term bearish. For that, I would like to see a break below flag support at 20.8 because there is a lot of support around 21 from the middle of the flag consolidation.

The Utility SPDR (XLU) formed a spinning top on Wednesday and a black candlestick on Thursday. I am seeing signs of selling pressure, but no breakdown just yet. This is an interest rate sensitive group that could come under pressure with another jump in rates. Watch minor support at 31 for the first signs of material weakness.

By Arthur B. Hill - Fri 05-Aug-05 at 05:36AM in Sectors
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Tuesday - August 02, 2005

Utilities Darken

The Utility SPDR (XLU) is surrounded by long black candlesticks that show selling pressure around 32-32.5. This is an interest rate sensitive sector and weakness here jibes with weakness in bonds.

XLU formed a big bad bearish engulfing on 14-July (red oval) and another long black candlestick on 21-July. After high volume advance back to 32.5 at the end of July, another long black candlestick formed to reinforce resistance at 32.5. The uptrend has yet to be broken, but it looks as if this sector may be in for some choppy times and flat trading.

By Arthur B. Hill - Tue 02-Aug-05 at 08:18AM in Sectors
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Thursday - July 28, 2005

Divide and Conquer

This is an excerpt from today’s Daily Swing at TDTrader.com. I find it quite helpful to divide the S&P 500 into sectors and the Nasdaq into key industry groups. Analysis of these parts tells me which sectors/groups are strong or weak. More important, which sectors or groups are driving the S&P 500 (SPY) and Nasdaq 100 (QQQQ).

As the table above shows, five sectors are bullish and three are neutral/bullish. It is important to see the Consumer Discretionary SPDR (XLY) and Information Technology SPDR (XLK) bullish as strength in these two bodes well for the overall economy. Until some of these sectors turn bearish, the overall outlook for the S&P 500 must be bullish. Tomorrow, I will post an overview of the key Nasdaq 100 industry groups.

The Consumer Discretionary SPDR (XLY) is hugging the upper trendline of the rising price channel. Despite being overbought with waning upside momentum, there are no signs of weakness as the stock crawls higher.

The Consumer Staples SPDR (XLP) remains within a triangle over the last five months and the surge above 23 provides a bullish bias within this neutral pattern. Watch key resistance at 23.5 for a breakout and minor support at 23 to turn the bias bearish.

Despite some hesitation in the Energy SPDR (XLE) over the last five weeks, the overall trend remains bullish. A rising price channel has taken shape since mid May and the upside target is 52. Watch key support at 44.4 for a trend change.

The Finance SPDR (XLF) certainly has become boring over the last two weeks. The stock gapped higher on 14-July and then pulled back into a tight trading range. Watch support at 29.9 for early signs of weakness.

The HealthCare SPDR (XLV) remains one of the strongest as money moves into pharma and biotech. The stock broke resistance at 30.8 and this area turned into support. The May-July period looks like a big consolidation and I expect a breakout at 31.8.

The Industrials SPDR (XLI) broke above minor resistance at 29.9 and the upper triangle trendline for a bullish bias. These breakouts give the stock a bullish bias, but it would take a new reaction high to turn fully bullish. Watch minor support at 29.8 for a failure and to turn the bias bearish.

Perhaps my bearish bias in the Materials SPDR (XLB) was a little premature. After all, the stock formed three white soldiers in May and July to solidify support around 27 (gray ovals) and broke above trendline resistance. There was a gap down on Tuesday, but the stock firmed on Wednesday. A break above 29 would turn this chart bullish and a move below 27.7 would put the bias back with the bears.

After a bullish breakout at 20.5, the Information Technology SPDR (XLK) consolidated with a flat flag. These are bullish continuation patterns and a move above 21.3 would signal a continuation higher. Watch flag support at 20.8 for early signs of weakness.

No change in the Utility SPDR (XLU) as the trend remains clearly bullish and there are no signs of weakness. A lot of black candlesticks have started to appear, but there are no worries as long as minor support at 31 holds.

By Arthur B. Hill - Thu 28-Jul-05 at 07:44AM in Sectors
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Thursday - June 09, 2005

Notable Sectors 050609

A lot depends on what the Consumer Discretionary SPDR (XLY) does. The stock has been consolidating for three weeks and formed a number of bearish candlestick reversals near resistance at 33.5. However, we have yet to see confirmation with a support break at 32.7. This would be the early bearish trigger and further weakness below 32 would bode ill for SPX.

Like the Consumer Discretionary SPDR (XLY), the Finance SPDR (XLF) has been consolidating for the last four weeks. The trading range comes near broken support and the 62% retracement mark, which make for a logical reversal spot. A move below 29 would be the early bear signal. Like XLY above, we should consider these bullish until at least the early bear signal.

With Software and Internet pulling back, I am watching the Semiconductors for signs of weakness. Should a third Nasdaq group join in on the weakness, the Nasdaq is likely to decline further. The Semiconductor HOLDRS (SMH) is trading near resistance and broke the steep trendline extending up from late April. The stock has been consolidating the last eight days with support at 34. Watch this level for early signs of weakness.

By Arthur B. Hill - Thu 09-Jun-05 at 04:16PM in Sectors
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Wednesday - April 06, 2005

Value in Pharma

Chet Currier of Bloomberg (click here) notes that pharmaceutical stocks now feature in a number of value and income driven mutual funds. I did a quick scan and turned up the following: Merck yields 4.6%, Bristol Meyers Squibb yields 4.4% and Glaxo SmithKline yields 3.9%. It is one of the few areas investors can find a decent yield and modest long-term growth.

By Arthur B. Hill - Wed 06-Apr-05 at 08:58AM in Sectors
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