Trading Strategy – Consumer Discretionary Select Sector SPDR ETF

One of the more noteworthy developments in recent days has been the move in Consumer Discretionary.  The Consumer Discretionary Select Sector SPDR ETF (XLY) has been trailing the S&P, down 0.4 percent for the week.  Now the question is whether this is a pause that refreshes or it’s a beginning of something worse?  In fact, according to our “U.S. Market Trading Map”, this week’s lagging trading actions indicated an impending bearish trend reversal. Below is an update look at a trade in the XLY.

The graphic below is from our “U.S. Market Trading Map”, show the near-term technical bias and trading ranges.  As shown, the underlying is in a short-term bullish trend when the price bars are painted in green.  The underlying is in a short-term bearish trend when the price bars are painted in red.  The yellow bars identify period of neutral or sideways trading pattern.  Additionally, the light-blue shading represents the short-term trading range.  A move above or below that range is considered overbought (as represents by the red shading) or oversold (as represents by the dark-green shading).  Readings above or below the red and green shaded areas are considered extremely overbought or extremely oversold.

Chart 1.1 – Consumer Discretionary Select Sector SPDR ETF (daily)

Our “U.S. Market Trading Map” painted XLY bars in red (sell).  After a strong run of outperformance since early 2017, XLY peaked in late July at 92.55. The ETF rolled over and printed a bearish series of lower lows and lower highs trading pattern.  The September’s rally ran into resistance just below 92.  This week’s downside follow-through confirmed…Click here to read more.

You see, our trend-following system is very unique as it attempts to pick turns before others see them. Timing is everything and if you’ve applied our system correctly, you should have made a killing in any markets.


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