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Sector Spotlight: Stocks Take A Breather

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Market Recap For August 11th, 2022

Thursday morning brought another rally right out of the gate. However, unlike Wednesday, this time saw a reversal of nearly all gains.

Everything about yesterday’s market was bearish, complete with a daily negative momentum divergence.

Yesterday’s Sector Performance

Energy ended up as the clear leader on Thursday.

Healthcare finished up on the bottom.

Five-Day Sector Performance

Energy has had a nice run of late, putting it on top of the overall market.

Consumer Discretionary is now the only sector in the red.

ETF Trade Watch

Energy Select Sector SPDR (XLE)

Consumer Discretionary Select Sector SPDR (XLY)

Although it may just be a countertrend move, oil is performing well, which means so is the XLE. After the sell-off in energy prices, stocks are rebounding. Energy prices are among the most volatile of any in the commodities market. Prices can fall then quickly reverse in the other direction as bottlenecks continue to plague the industry.

If the market is set to wash out some of the excesses, discretionary stocks will most likely take a hit. If this happens, traders could look to the downside of the sector ETF XLY. Next week will paint a better picture of if this bull rally still has some steam left.

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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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