Stocks closed sharply higher Friday as the monthly employment report suggested economic growth is tepid enough for the Federal Reserve to maintain its bond-buying program over the next few months.
Most key S&P sectors ended higher, led by industrials and consumer discretionary. As such, the Industrial Select Sector SPDR (XLI) jumped 1.88% to 43.79. This is bullish from a technical perspective. In fact, as the chart below indicated XLI could climb up to test key technical resistance near 46 after the downward trend halted. Below is an update look at a trade in XLI.
The graphic below is from our “U.S. Market ETF Trading Map”, which show the near-term technical bias and trading ranges for XLI. 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 – Industrial Select Sector SPDR (daily)
As indicated in the above chart, our “U.S. Market ETF Trading Map” rates XLI as a Buy. XLI rebounded nicely off support at the trend channel moving average (as represents by the white line in the chart). That level roughly corresponds with the 50% Fibonacci retracement of the April to May upswing. Friday upside breakout had helped clear resistance at the May falling trend line, suggesting that XLI might have switched to a new uptrend…Click here to read a detail technical analysis.
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