XLF- The big question mark in the market. There is resistance above at 9.70 and support at 8.66. This is a good short if XLF breaks 8.66. The financials are too news driven so be careful on any side of this sector. But the index overbought, playing the downside is not a bad idea.
XLE- Broke its upward trend line on Friday. Sitting at its 50MA. There is weak support beneath the 50MA. The dollar looks to be making a rally as well, which doesn't fair well for energy. UNG is breaking down as well as oil(see below). A break below the 50MA is a good place to short.
USO- It is sitting at the bottom of its channel. It failed to close above 32.04 which I mentioned earlier. This looks like a good short if it breaks the channel. It also looks like a great buy if it pulls back to the 27 level. There is support at the 27.70 and the 50MA.
XLU-Right now its consolidating in a descending triangle and is at critical support. Any break below of the support and triangle is a great place to short.
XLB-Hitting the top of it's downtrend line, and close to a 23.6 Fib line. A safe place to short is if it breaks the orange trendline. You could also short at the downtrend line, but a little riskier in case it breaks through it.
XLI-Resistance at 19.75. It might want to fill the gap above that so be aware of that. There is also support at the 50MA. A close above 19.75 and it can run, a break below the up trendline is a short. Don't try to top tick this one.
XLV- Hitting a 23.8 Fib line and resistance. It is forming an ascending triangle though. A breakout above these levels is very bullish. This stock should let us know by Monday or Tuesday which way it is going. I am leaning towards the downside though. Based on the overall market, XLV being overbought and the gap up at 23 should be filled.
XLY- Still in an uptrend, but will be meeting resistance soon at 20.88. Could easily pull back to 19 where there is strong support and the 50MA. A break below 19 is bearish, but a bounce at this level is very likely as well.
XLK- Easy chart to read. It is very range bound. It is right at resistance but have support at 13. A break above 16 bullish. Break below 13 bearish. I rather be buying at 13 or even high 14's. Technology has been a strong sector as well. It has formed a triple top or could be a 3rd Watch, as well as if it pulls down to 13 it be a triple bottom.
XLP-Looks to be forming an AB=CD bearish pattern. Hitting its first resistance level but also has resistance at 22.50. Better off waiting to 22.50 to short, not a great long entry level for this either.
So taking a top down approach from the market we can see everything is:
- Overbought
- At resistance levels
- Close to breaking trendlines
My favorite shorts right now would be:
XLV
XLU
XLE
My favorite longs right now would be:
USO- at 27ish
XLK- at 13-14 or a break out above 16.
XLB- at 20ish.
