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Why These Sectors Should Be On Your Watchlist This Week


ETF Trade Watch

After the rally from last week and before, there are a couple of sectors, as well as ETFs, to have on watch this week. If the market continues to rally, investors and traders can expect the ETFs in the video below to climb with the broader market.

Technology Select Sector SPDR ETF (XLK)

Technology Select Sector SPDR ETF (XLK) is one sector to keep on watch. As the market continues to push, many of the tech names push as well. The technology sector cuts a bit like a double edged sword. On one hand, when market sentiment is overwhelmingly bearish, technology is one of the hardest hit sectors. On the other, when a bull rally is taking place, just the opposite is true with technology oftentimes leading the charge.

Keeping an eye on this ETF can also clue traders into which individual names to keep on hand. For example, one of the largest holdings in the XLK is Microsoft (MSFT), meaning if the ETF is making a large move to the upside or downside, it is likely tied to the performance of MSFT. Traders can then look to MSFT to make a trade based on the sentiment and momentum of the technology sector.

XLK has a pretty significant level it is pushing toward with the major test being if the price can hold above the key level pointed out in the video. These levels not only establish when we should enter a trade, but when to exit them as well. If the price fails to hold this level, that is our cue to exit the trade.

Consumer Discretionary Select Sector SPDR ETF (XLY)

Another area of the market we want to keep an eye on is the Consumer Discretionary sector. As consumer spending stays hot even despite inflation, rising rates, as well as heightened fears of recession. Strength in this spending has caused big retailers to continue to move in a bullish manner, along with the rest of the market.

The big price level to watch on XLY is marked in the video below. Again, like the XLK level, successfully breaking through this level means the rally stays intact, however, failure to do so could mean a regression back to a previous level of resistance turned support. Keeping an eye on the consumer’s spending habits, as well as the trend in the broader market, will indicate what side of the trade we want to be on going forward.

Regardless of what the next move will be, we are right at a pivotal level for both ETFs, meaning traders should be extra vigilant over the next week or so.

Does trading sector ETFs sound more like your speed? Join me as I teach my strategies for breaking down the market by looking at which sectors are the hottest, and can provide the most opportunities to us as traders. With my Smart Trades options trading service, not only will you get all my trades, but you’ll also be a part of a growing community of like-minded traders looking to learn and hone their skills.

I look forward to trading with you, but until then, as always…

Good Luck!

Christian Tharp, CMT

Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group. My Chartered Market Technician (CMT) designation substantiates me as an expert in areas such as the technical analysis of stock trends, market indicators, cycles, price patterns, Elliot Wave principles, Candlestick charting, analyzing financial trends and behaviors, portfolio strategies, and forecasting future price movements. With my straightforward approach to simple, systematic trading, students learn how to strategically assess buy signals and market entry timing, establishment and management of stop losses, and how to employ a simple and disciplined trading approach that creates profits.

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