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Sector Spotlight: Bull Flags Form On These Sector ETFs

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Market Recap For August 2nd, 2022

As suspected, markets took another stab higher. However, once again, the attempt to push through key resistance marks failed.

The Dow, in particular, looks set to fall. In addition, both the S&P and Nasdaq have formed weakening momentum on the most recent runup.

Yesterday’s Sector Performance

All sectors ended up in the red, with Services barely winning the day.

Real Estate fell to the bottom of the market.

Five-Day Sector Performance

Discretionary is still the weekly leader, no changes.

Healthcare is not only at the bottom, but it is now the only sector in the red.

ETF Trade Watch

Energy Select Sector SPDR (XLE)

Oil failed to retake the $95 level or the 200 MA, which means the potential for a big fall remains present. The XLE would see some substantial downside if a bigger rejection take place in oil prices. Oil prices have trended down since the beginning of June, where the prices reached as high as $122 before falling for the past two months. Traders should keep a close eye on prices to see if prices will bounce back or continue to decline.

Real Estate Select Sector SPDR (XLRE)

With Real Estate seeming to break down yesterday, a larger pullback could be in the works for the XLRE. As mortgage rates fall, along with prices due to falling demand for homes, this could continue to create downward pressure on this real estate ETF. As with oil prices and demand, traders should continue to watch this trend in the housing market in order to identify opportunities, either to the downside or upside.

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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