What a difference a couple of weeks make. After hitting an all-time high in early June at 92.42, the Consumer Discretionary SPDR ETF (XLY) shares have collapsed more than 20 percent amid valuation concerns. Now the question is whether this is a pause to refresh or it’s a beginning of something worse. Technically speaking, a 20 percent decline from an all-time high the technical definition of a bear market move. According to our “U.S. Market Trading Map” there could be more pains ahead for the ETF. 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. 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 1.2 – Consumer Discretionary SPDR ETF (daily)
Our “U.S. Market Trading Map” painted XLY bars in red (strong sell). There is a consolidation near the 23.6% Fibonacci retracement, which represents the digestion period in the after math of the June massive selloff. Money Flow measure is below the zero line, indicating…Click here to read more.
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