Trading Strategy – Consumer Discretionary Select Sector SPDR ETF

One of the noteworthy developments in recent days has been the move in consumer discretionary. After a strong run of outperformance since early April, the group has seen a sharp reversal in recent weeks as amid growing concerns over the new U.S. tariffs on China sourced goods, and the retaliatory tariffs imposed by the European Union and Canada in response to U.S. tariffs on steel and aluminum imports.  The Consumer Discretionary Select Sector SPDR ETF (XLY) rose 0.67 percent Monday, bringing its YTD gains up to 14.1 percent.  Now the question is whether the rally has more legs?  Below is an update look at a trade in 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. 

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

Our “U.S. Market Trading Map” painted XLY bars in green (buy) – see area ‘A’ in the chart. Over the past few days, XLY has been trending lower in a short-term corrective mode after the late June recovery rally ran out of steam near 113.  The July correction found support near the 50-day moving average.  Monday’s upside breakout…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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