Stock and Sector Overview

Interesting week last week. Some sectors continued to unravel and some bounced. Time for a rotation again I guess. Anything that is a REIT continued to unwind. Apartment REIT’s, health care REIT’s, you name it.

$IYR continues to have the glide pattern of an anvil.

iyr

$XHB caught a dead cat bounce late in the week, so names like $LEN and $PHM acted well. Two days doesn’t a trend change make, but the ETF did retake its 200 day moving average. Builders should be on your watchlist as longs, it is possible they dried out.

xhb

$XLB Materials have been hot as names like $CLF, $WLT and $FCX have rallied from ridiculously oversold levels. The group was strong until Thursday though, as the sector broke a two month uptrend line.

xlb

$XLF   So are higher rates good for banks or what?? Double edged sword though. They make better vig with higher rates, but the trade off is a possible slowdown in housing demand. We’ll see how this all shakes out, but I still like the banks and they will be buys again soon. The ETF is only a buck off its annual high, so a move down to the blue line (100 day moving average) is certainly possible.

xlf

$IBB Ever since this ETF bumped its head at the top of channel it didn’t have  a shot. I should have taken my own advice on this and sorted the bejeezus out of it but didn’t. Would have been good for a fast 13 bucks. Now I’ll wait to get long. Names like $BIIB and $CELG have quietly gotten hammered over the last couple of weeks.

ibb

$XLK Technology broke its 20 day moving average thanks to $CSCO and general market weakness.  $GOOG is really struggling but $AAPL pulled up the rear thanks to Icahn. $AAPL was acting well before Icahn though and I think it has become a place where nervous money goes to hide out.

xlk

The market may be due for an oversold rally next week, although I’d like to see $SPX get down around 1630 first. We are running low on catalysts at this point and I see more confusion and uncertainty then clarity ahead so be prepared for chop and volatility. Its also August and moves get embellished. Good luck out there.

I may be back later with some specific set ups, but the pickings are slim right now.

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Joe Donohue

Joe is a full time trader with 25 years experience. He is a senior contributor and investor in Stocktwits and has been seen on CNN Money and quoted in Marketwatch, Forbes, Reuters, NY Times and Wall Street Journal.