- XLF Shows a Little Leadership.
- Stocks to Watch in XLF.
- TLT Backs off Resistance.
- Two Cyber Security Stocks Bounce off Support.
- Ametek Ends Consolidation.
- Video Food for Thought.
- On Trend on Youtube.
...XLF Shows a Little Leadership
... The Financials SPDR (XLF) led the sector SPDRs on Tuesday with a .49% gain. One day of leadership does not a trend make, but I will consider the cup half full for this sector. In an effort to simplify the chart analysis, notice that XLF recorded lower lows into July (red line) and then started recording higher highs in August (green line). Even though XLF remains well below its January high, which was a 52-week high, the trend is up and I am focused on the advance that began in early July. The August lows mark first support at 27.5 and I will stay bullish on XLF until a close below this level.
Within the finance sector, I am seeing leadership from the Insurance SPDR (KIE) because it hit a new high last week.
The Regional Bank SPDR (KRE) also popped for a half percent gain and edged above the channel trend line. This is really not a flag because the prior advance is not sharp enough. Nevertheless, this small channel defines the two week downswing and a short-term breakout is in the making. I would re-evaluate on a close below 62.
Key Stocks to Watch in XLF
TLT Backs off Resistance
I featured the unadjusted 20+ YR T-Bond ETF (_TLT) in yesterday's show (On Trend) as the ETF fell from resistance. To recap, I think the long-term trend is down because the ETF hit a 52-week low in mid May and failed at resistance in the 122-123 area four times since March. The most recent downturn is just six days old and I am using it to mark my line in the sand. A close above 122 in TLT and 103 in IEF would call for a re-evaluation of my bearish stance. In fact, such a recovery could be quite bullish and lead to a bigger resistance breakout.
The next chart shows the 10-yr T-Yield ($TNX) holding the 27-28 area (2.7-2.8%) with a bounce on Tuesday. The 30-yr T-Yield ($TYX) surged off the 29.5 area (2.95%) with a surge above 3.05% on Tuesday.
Two Cyber Security Stocks Bounce off Support
The Cyber Security ETF (HACK) hit a new high last week and finished very close to this high on Tuesday. Clearly, this group is leading and worth our focus for individual stock setups. The next two charts were initially highlighted last week Monday, August 27th. The first chart shows Proofpoint (PFPT) surging to new highs with a big move from December to May. The stock then moved sideways and established support in the 112.5 area (blue zone). Buying interest appears to be perking up as the stock bounced off support in late August and I expect a challenge to the prior highs.
The next chart shows Qualys (QLYS) with a surge to new highs and a trading range the last two months. The broken resistance zone turned into a support zone as the stock bounced the last two weeks. The big trend is up and a trend in motion stays in motion so I expect new highs in the coming weeks.
Ametek Ends Consolidation
The next chart shows Ametek (AME) hitting new highs in March and then forming a large triangle consolidation into July. The stock broke out of this consolidation with a surge in late July and this breakout signals a continuation of the bigger uptrend. Shorter-term, the stock fell back with a falling flag of sorts and is trying to break out of this pattern.
Video Food for Thought
I watch selective clips on CNBC and Bloomberg and always tune in when Marko Kolanovic of JP Morgan speaks. He is a quant with a longer-term outlook. Kolanovic discusses growth versus value, the next liquidity crisis and the chances for more flash crashes. These are things to consider when we move into 2019. Click here for the video.
On Trend on Youtube
Available to everyone On Trend with Arthur Hill airs Tuesdays at 10:30AM ET on StockCharts TV and repeats throughout the week at the same time. Each show is then archived on our Youtube channel.
Topics for Tuesday, September 4th:
- XLF Cup is Half Full (plus KIE and KRE)
- TLT Correlations with XLF, KRE, XLU and IYR
- TLT Backs off Resistance (plus IEF, $TNX, $TYX)
- Oil Extends Uptrend (plus XLE, XES, XOP)
- European Indexes Weaken
- Q&A: Unadjusted TLT, Trading Breakouts, USO vs $WTIC
- Charts to Watch: IWM, ITB, XLC, BAC, FITB, JPM
Questions, Comments or Feedback?
I cannot promise to response to all correspondence, but I will read it and take into under consideration. I greatly appreciate all feedback because it helps me improve the commentary and provides ideas for the future. Sorry, I do not take symbol requests.
Plan Your Trade and Trade Your Plan.
- Arthur Hill, CMT
Senior Technical Analyst, StockCharts.com
Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill
