Money Control Place
  • Politics
  • Business
  • Stocks
  • Investing
  • Politics
  • Business
  • Stocks
  • Investing

Money Control Place

Stocks

Sector Rotation Signals an Important Week Ahead for Stocks

by September 22, 2023
September 22, 2023
Sector Rotation Signals an Important Week Ahead for Stocks

First of all, my apologies for everybody who has been waiting for a Sector Spotlight this week. I traveled back from the US on Monday, got caught up in working on back-log stuff, and now it is Friday already

A new SSL will be recorded and posted on Monday! Sorry for the delay.

But here’s a quick take on sector movements over the past few days.

Daily Sector Rotation

The daily RRG for this week shows an apparent risk-off rotation with XLU, XLV, and XLP on strong RRG-Headings moving into or toward the leading quadrant.

On the opposite side, it is primarily XLK moving into the lagging quadrant while XLY and XLE are still inside, leading but rolling over and losing relative momentum.

With the S&P 500 down almost three percent, it is a bad week for the markets.

Looking at the daily chart of SPY, I see two possible scenarios.

Completed Head & Shoulders Top, or Market Finding Support?

The first is a completed H&S (like) formation triggered yesterday when the neckline broke with a downward gap. Measuring the top of the formation to the neckline and projecting that distance downward from the breaking level puts the target for the pattern around 405-410 in SPY.

Upside potential will be limited to the level of the neckline. Former support returning as resistance and/or the gap area between 435 and 440.

The second scenario could be that SPY is currently trying to find support at the level of the August 2022 high, and possibly starting to form a new low against that support level.

I am leaning more toward the second scenario, where SPY is trying to find support and possibly looking for renewed upside movement from current levels. This is primarily based on the sector rotation as it is still playing out on the weekly RRG.

XLC, XLY, and XLK are still inside the weakening quadrant and leveling off in terms of relative momentum, potentially setting the tails up for a rotation back up towards leading and resuming their relative uptrends against SPY.

The defensive sectors, XLP, XLV, and XLU, are all inside the improving quadrant, showing short tails and potentially rolling over to start moving lower, back towards the lagging quadrant.

430 Holds The Key

In either case, the area around 430 is crucial for the development in SPY in the coming week(s). If it holds, the market can get more constructive again and seek higher levels.

A clear break lower will confirm the first (H&S) scenario and its possible target area and negate the second scenario simultaneously. From a sector rotation perspective, the moves that I will be watching next week are:

When the daily tails for XLY, XLV, and XLP start to roll over, and XLY, XLK, and XLC pick up strength again, that would support scenario 2. This should be followed by a further rotation towards the leading quadrant on the weekly RRG for XLY, XLK, and XLC shortly after, and the defensive sectors rolling over while they are still inside the improving quadrant.

A continued strength for the group of defensive sectors in the coming week, possibly combined with SPY challenging 430, will be seen as a very strong sign of scenario one starting to play out. In the case of SPY breaking below 430, the first meaningful support level is found just below 420 in the area of the Jan 2023 peak.

#StayAlert and have a great weekend, –Julius

0
FacebookTwitterGoogle +Pinterest
previous post
GNG TV: “Go” Trends in Rates & Dollar Causing Problems for Equity
next post
Volatility Taunting Fresh Equity Buyers

Related Posts

The Wisdom of Jesse Livermore, Part 11

July 28, 2023

Your Weekly Stock Market Snapshot: What It Means...

June 7, 2025

With the Fed on Hold, Santa Just Revved...

December 4, 2023

High Risk of Market Downside in December?

December 7, 2023

Ozempic Set the Stage, But Could Novo’s Newest...

March 9, 2024

Finding Pure Strength Using the PMO (DP Trading...

January 22, 2024

Intel’s Rising SCTR Score: Why You Should Add...

February 14, 2025

S&P 500 Plunges Below 5K!

February 14, 2024

Apple (AAPL) and Google (GOOGL) Flashing “Pure Weakness”

March 1, 2024

Stocks Pop Higher as Defensive Sectors Thrive

May 10, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • S&P 500 Breaking Out Again: What This Means for Your Portfolio

    • Laramide Identifies Targets for 15,000 Meter Drill Program at Kazakhstan Uranium Project

    • Coinbase Expands USDC Rewards to Canada

    • NVIDIA Facing Weak Demand for New Chip as Chinese Firms Turn to Homegrown Silicon

    • Newmont Withdraws from Mount Coolon Joint Venture, GBM Regains Full Ownership

    • Crypto Market Update: Bitcoin ETFs Log Biggest Inflows Since July

    Categories

    • Business (1,374)
    • Investing (2,910)
    • Politics (3,699)
    • Stocks (1,792)
    • Uncategorized (20)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: MoneyControlPlace.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 moneycontrolplace.com | All Rights Reserved