Julius de Kempenaer
August 15, 2016
Owner of RRG Research, the firm that holds the IP and TM for Relative Rotation Graphs(TM)

Strong rotation for Technology but SPY is still lacking fuel

To surrender or not to surrender? That's the question!

After a nice run up in the S&P 500, I started to worry about its ability to push higher when resistance levels coming off previous highs started to act up. At, more or less, the same time, sector rotation of US sectors began to show a pattern favoring more defensive sectors in the lead. Usually not a very good sign for the general market. This started back in April-May, and the pattern of sectors labeled as defensive leading the market from a relative perspective is still in play.

The Relative Rotation Graph above shows the sector rotation for the S&P 500 sector ETFs (Telecom, XTL added as well). In my latest blog-post on StockCharts.com I take a look at the relative positioning of the various sectors and the impact on general market direction.

The main takeaways from the article are:

  • XLF, XLY, and XLP all in relative downtrends
  • XTL, XLU, XLB and XLEproviding balance on far right of the RRG
  • XLF remains a troubled child but is sending mixed signals now
  • Negatives outweigh positives on SPY chart for the moment, remaining cautious
  • Strong sector rotation for Technology (XLK)

The full article, including 5 charts can be found here .

Julius


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