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Sector Spotlight: 2 ETFs That Could Be Poised For A Rally


Market Recap For July 7th, 2022

Wednesday’s pause gave way to another leg up in the current rally. All major indices, and most sectors, finished in the green.

Yesterday’s close was a solid one, which should lead to even higher prices today, assuming the monthly jobs report doesn’t have other plans.

Yesterday’s Sector Performance

Energy swapped places with Utilities, taking the top spot on Thursday.

Utilities ended up as the only sector in the red.

Five-Day Sector Performance

Discretionary is now the leading sector over the past week.

Energy is at the bottom of the week, but yesterday could mark a change.

ETF Trade Watch

The market experienced the third positive day in a row on Thursday as stocks rose in anticipation of the employment numbers set to be released on Friday. If the market does push higher, it would seem that Technology, Services and Consumer Discretionary will perform best, as these stocks have been among the hardest hit by the bearish cycle.

Two of the most common ETFs to consider in that scenario would be XLY and XLK.

Consumer Discretionary Select Sector SPDR (XLY)

Due to the recent market rally, XLY looks to break the recent high that came at the end of June, but if the price does not exceed this level, it could possibly set up a “double top” scenario. This is a bearish pattern. However, if the market rally continues, look for investors to pile into this ETF to take advantage of relatively low prices. If the jobs numbers come in lower than expected, it could spook investors from going long just yet.

Technology Select Sector SPDR (XLK)

A similar formation can be seen setting up for the tech-related ETF, XLK. As the ETF’s price rises, it’s drawing closer to the resistance level it was unable to break through at the $145-$147 price. The tech sector has seen some of the steepest declines of any area of the market, but this does present an opportunity. If the Fed is able to curb inflation, the tech sector could see a large rally as investors rush back into higher-risk assets.

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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