Art's Charts

XHB and IYR Break Wedge Resistance

Arthur Hill

Arthur Hill

Chief Technical Strategist, TrendInvestorPro.com

- Charts Worth Watching: AET, CAKE, IHF, ITB, IYR, TLT, UNH, XHB
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Link to today's video.


The next update will be Friday (July 24) by 7AM ET. 

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The 20+ Year Treasury ETF (TLT) is trying to firm near the 62% retracement line. TLT surged above 96 with its biggest move since December. Strength in the stock market zapped the bond market though and TLT pulled back sharply over the last six days. Despite this setback, TLT managed to firm near the 62% retracement mark on Monday. This is a good spot for a little reversal. Watch for a break above 93.

090721tlt
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The Home Construction iShares (ITB) and Homebuilders SPDR (XHB) led the market higher over the last two weeks with big wedge breakouts. Also notice that the price relatives broke resistance in a show of relative strength. Based on the sharpness of the surge, these breakouts look valid. However, both are overbought already and ripe for a pullback or consolidation. A pullback could retrace 38-50% of the two week surge and broken resistance levels could turn into support. 

090721xhb

090721itb

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The REIT iShares (IYR) is also perking up with a channel break and resistance challenge over the last four days. Also notice that IYR surged over 3% on Monday with the highest volume since 1-June.

090721iyr

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The Healthcare Providers iShares (IHF) is stalling at resistance as healthcare reform hangs in the balance. With Congress scheduled to recess on August 8th, the next three weeks hold the key for these stocks. On the chart, IHF hit resistance at 39 in May, June and July. The ETF formed a triangle consolidation over the last four weeks. A break above the July highs would be bullish, while a break below the July low would be bearish.

090721ihf

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Aetna (AET) formed a rising wedge over the last seven weeks. The stock also shows relative weakness as it lags the S&P 500. A break below wedge support would reverse the seven week advance.

090721aet

United Healthcare (UNH) gapped down in mid June and stayed down with a triangle consolidation. While the market moved higher the last two weeks, UNH showed relative weakness with flat trading. Watch the triangle boundaries for the next signal.

090721unh

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Cheesecake Factory (CAKE) remains on the watch-list as it stalls near resistance. The 9-day trend is up as long as support at 17 holds. A break below this level would be the first sign of weakness. Support from the consolidation lows hold the medium-term key.

090721cake

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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More