We reviewed the Industrials (XLI) yesterday noting “But the lower low is in and now a bounce to test the SMA 200 breakdown or very possibly the declining SMA 50 would be logical.”
Today the thing bounced up and through the SMA 200 and frankly, I was a little surprised at how this sector and much of the rest of the US market performed today. Today may have been machines and algos whipsawing everybody with a better bounce to follow. But as it stands now XLI made a bounce, reversed it and sits in a bearish position. Resistance is the 72 area. The no-brainer short would be the declining SMA 50, but if today’s reversal holds that may not be the next move. Again, 72 +/- is the gateway.
Today the Healthcare SPDR (XLV) did a bearish thing as well. It fell below the SMA 200 and broke down from a bear flag. Again, it could be a head fake. But my job is to identify what is happening and on XLV that is a bearish breakdown below key moving averages and so it is short-term bearish.