Finally, This Sector’s at New All-Time Highs!

Yesterday’s bearish action reversed today, led by the sector we’ve been highlighting for some time – Retail (XRT).

The next question is, does it have the strength to continue if the market doesn’t rally with it?

Today it had the market on its side; the answer remains to be seen.

Today, no bad news for the market was news was good news, but that’s not a long-term solution.

For example, a lack of trade rhetoric enabled a bounce in the Turkish lira, and that seemed to relieve the market of its lingering concerns of Turkey’s plunging currency.

While the major averages all rallied, none of them broke out of their recent multi-day range. So, until they move higher, it’s hard to see why they should.

On the bright side, however, all but 1 of the 14 major sectors in our Big View Sector Summary posted gains, and the worst performer, SMH, was merely unchanged.

Not only did all the sectors close up, but there are several that rallied enough to create some potentially interesting bullish patterns.

Clearly, Retail, XRT, up 2.3%, was the brightest spot in the market, and since the largest component of the ETF is less than 2% of its assets, this is not an ETF that will move big because of only a few stocks.

This is more than we can say for most sector ETFs, and it bodes well for the health of the uptrend in retail.

In addition to the breakout pattern in XRT, Consumer Staples XLP reversed its recent pullback, closed over its 2-day range, and bounced off its 200-day MA.

Consumer Discretionary, XLY, also closed over its 2-day range.

IYT was also strong enough to trade well above its prior two days of consolidation before giving back some of those gains late in the day. The result, however, is a pattern that will look good if it continues higher.

Yesterday I said that there are several ways for a market like this to “wake up.”

  1. Big surprising bullish news.
  2. Change from nervous and disinterested to scared and oversold.

A big breakout in one sector isn’t surprising bullish news, but if the sectors can quietly set up for a day when several sectors breakout like retail, that would surprise the market and perhaps get the money on the sidelines more interested.

It’s not here yet, but I’m not going to be surprised if it happens.

S&P 500 (SPY) Inside day. Friday’s high of 284, confirmed to be resistance, then 285 should be serious resistance. Today’s low needs to hold. Under that the 280 level is big.

Russell 2000 (IWM) More consolidation. Lots of resistance near 169. Look for support around today’s low, then 165 and the swing low at 164.

Dow (DIA) Inside day. 255 likely to be strong resistance. 258 is the next swing high. Today’s low is support to hold, then swing low at 251.

Nasdaq (QQQ) 182.93 is the all-time high, and the key support is at 179 then 177.75 then the 50 DMA at 175.80