Investors preference between XLP and QQQ is important to pay attention to as it shows the trade-off of "risk off equities" (XLP) versus "Risk on equities" (QQQ). The last time XLP was at these levels relative to Tech was in 1999!
The chart above shows XLP/QQQ. As you can see, XLP outperforms heavily during larger degree market corrections. Since December 2021...
XLP bearish till 66
Pitchfork headed to new bearish downleg.
Stay tuned for further sellers
Inflation higher than expected and global trade slowdown due to secondary sanctions will cooloff this ETF
This idea is a little out of the norm for me. I generally stick to broad market, but from time to time I play sectors.
Credit Received: 0.36 or $36 / contract
Strikes: Short 73 Long 70
Max Loss: 300-36 = $264 per contract
Short Leg Delta: 30 Delta (more on this below)
Trade Reasoning:
1. Market is being beat up by both the Ukraine - Russia situation and...
Daily Chart Report
XLP looks like it is forming a bull flag. If it breaks out to the upside then the first price target would be the ATH resistance level. If it breaks down then you will find support around the 73 level. If you see the indicator below the two lines are compressing. A compression always leads to an expansion. A big move is in the cards next week....
I use sector ETFs in my IRA account. Currently, I hold XOP and XLF, and I wish I held XLE. I will try to buy XLP (Which shouldn't be a problem) next week.
For Week 4, I'm expecting XLF to firm up and XOP to come in a bit. XLE would be kind to give me an entry point at prior resistance/ support, but we'll see. Oil looks darn strong at the moment.
XLF...
XLP is coming up to a potential top with a morning star starting to for on 24hr. Looks to be forming a broadening top as well. pushed up to a nice fib level for potential reversal with strong selling volume at the top. Momentum is drying up on the 1 hr and 4hr as well as multiple bearish divergences
It should be noted that most of the strength to close out 2021 was in the more defensive sectors. XLP, XLU, XLRE ect all very strong. Not the best sign to start off the new year.
Rotation into defense sectors like consumer staples has played out well since December 10th's inflation report.
With 5% breakaway run into all time highs, I will be looking to play any side ways and downward pressure with credit spreads.
XLP relative to SPY has be outperforming for the path 4weeks. It is now hitting resistance. If it breaks resistance it can run up quite a bit. The resistance level is also confluencing with the 50day SMA.
Been watching this setup for a little while. not much you can do now unless you're already in XLP names from lower, but it's a great example of capital flows re-orienting around defensive names at the moment, in light of potential tapering / rates moves in the future. High mult continues to flounder.
- This chart is showing the price action for XLP/ SPY. XLP is the consumer staples ETF and is the sector that investors flock to during risk off situations in the market.
- What I'm trying to show here is the massive divergence between price and RSI. Momentum is building up for last few months which means a massive rally in XLP/ SPY is coming.
- A couple...
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Go Small cap gems. #valueinvesting
XLP - Consumer Staples are up 40% from their covid low, SPY is up over 90% since April 2020.
A bottom in XLP/SPY has always signaled a larger degree market correction. Investors rush into XLP as a flight to safety.
The ratio XLP/SPY looks like its chugging down still and have followed in the weakness of defensive stocks these past weeks.
WAKE ME UP WHEN XLP...
