Sport Investors League
  • Politics
  • Stocks
  • Investing
  • Business

Sport Investors League

  • Politics
  • Stocks
  • Investing
  • Business
Stocks

Will This Sector Rotation Be The Start Of Something Bigger?

by admin July 19, 2024
July 19, 2024
Will This Sector Rotation Be The Start Of Something Bigger?

Strong Rotations on Daily RRG

This daily RRG shows the sector rotation over the last five days. With only one more trading day to go (Friday, 7/19), the emerging trends are becoming clearer.

The only sector that has been driving the market higher is now the only sector inside the weakening quadrant, on a negative RRG-Heading and close to crossing over into lagging.

Consumer Discretionary is rolling over inside the leading quadrant, indicating that it is losing some of its recent strength. Communication Services is the only sector inside the lagging quadrant, but it is bravely attempting to curl back up.

All other sectors show long tails, indicating strength behind the move, and on a positive RRG-Heading either inside the improving quadrant or already inside leading.

Can The Weekly RRG Keep up?

Comparing this week’s rotations with those currently visible on the weekly RRG reveals some fairly opposite moves.

On the weekly RRG, XLK is still inside the leading quadrant, and only this week seems to be losing some relative momentum. Only Real Estate and CXonsumer Discretionary are also on a positive RRG-Heading but still low on the RS-Ratio scale.

All other sectors are on negative RRG-Headings.

We see now that the market capitalization knife is cutting on both sides. When technology stocks, especially semiconductors, rallied, the technology sector led the market higher. But we now see these same groups leading the charge on the downside.

This is the daily RRG showing the industries inside the technology sector. And you see that semiconductor and software stocks are pushing into the lagging quadrant against XLK as the benchmark. We have already seen how XLK is heading toward the leading quadrant.

The observation that the other industries inside technology are on a positive heading and improving or leading shows how heavy the impact of the weakness in software and semiconductors is on XLK’s move.

The table above shows how Semiconductors is the only group underperforming XLK in the last five days. Only computer services and telecommunications equipment stocks outperformed the S&P 500 index.

Technology Is A Drag

Hence, this heavyweight sector (XLK), led by its most important group (Semiconductors), is a big drag on the S&P 500.

This can be nicely visualized by a market carpet chart showing performance over the last five days.

Even though most sectors have shown positive returns over the period, XLK’s -3.17% drags the S&P 500’s performance down to minus 0.7%.

Market Cap is Truly a two-edged sword.

But how will this work out in the coming days/weeks?

The longer-term trend on the weekly RRG still shows Technology as the leading sector. When the price trend is also still moving upward, I would generally prefer to remain in the longer-term uptrend and watch for the shorter, daily tails to catch up and get back in sync with the weekly.

And this is where things are getting a little tricky. The price trend, certainly on the daily chart, got damaged.

The price gapped lower and closed below the rising support line, which marks the lower boundary of the rising channel that had been in play since April. Price is now resting at support near 222.40, the level of the previous low. While both the MACD and the RSI show a strong negative divergence.

The downward break from the channel is the first trigger that signals the execution of the negative divergence. The second and probably final trigger will be a break of support around 222.40.

When such a move occurs, and XLK starts to decline further, it will likely start to negatively affect the rotation on the weekly RRG and drag the XLK tail lower and out of the leading quadrant.

The sector’s upside potential is currently becoming problematic, with resistance levels in the gap area between 228.30 and 231.56. If support breaks, downside risk will open up.

The negative divergence on the SPY chart is even more pronounced. The support level to watch here is 550, while upside potential is limited to 555, and after that, the level of the rising support line of the former rising channel.

We are ,very likely, facing at least some sideways movement in the S&P 500.

The answer to “Will this be the beginning of something bigger?” will probably surface in the next few weeks.

#StayAlert –Julius

0
FacebookTwitterGoogle +Pinterest
previous post
Small-caps Break Out and Lead – Now What?
next post
Meet CrowdStrike, the company at the heart of the global tech outage

Related Posts

Stay Ahead of Tariffs: Essential Chart Analysis for...

February 15, 2025

DP Trading Room: Tracking Gold Sentiment

September 19, 2024

DP Trading Room: Equal-Weight Losing Against Cap-Weight SPY

June 11, 2024

Equities Are Not the Place to be as...

April 21, 2025

Top 5 Stocks in “Go” Trends | Fri...

June 29, 2024

Failed Bearish Patterns are Bullish for S&P 500!

May 31, 2024

Breakdown of NVDA’s Stock Price and S&P 500:...

June 27, 2025

Golf Geometry & Kinematics

July 12, 2024

Three Ways to Visualize the Start of a...

October 24, 2024

Fed Watch: Key Bullish Patterns in the S&P...

May 8, 2025

    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.

    Recent

    • Don’t Overlook This Lagging Industry; I Believe It’s Set To Explode!

      July 7, 2025
    • Iran still wants a nuclear weapon despite ‘serious damage’ from US, Israeli strikes: expert warns

      July 7, 2025
    • Trump dismisses Musk’s political ambitions as ‘ridiculous’ in sharp rebuke

      July 7, 2025
    • Questcorp Mining Continues Exploration in Advance of Drilling at the La Union Gold & Silver Project in Mexico

      July 7, 2025
    • Week Ahead: NIFTY Set To Stay In A Defined Range Unless These Levels Are Taken Out; Drags Support Higher

      July 6, 2025

    Categories

    • Business (1,012)
    • Investing (2,543)
    • Politics (3,151)
    • Stocks (1,118)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: sportinvestorsleague.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 sportinvestorsleague.com | All Rights Reserved