Carl and I have put together our Sector SPDR ChartList that includes all of our major indicators on each chart. I've been watching the sectors closely; most of the sectors Year-To-Date have been performing well, although none have really outpaced Technology when you look at the Sector Summary:
While I am still bullish on the Technology (XLK) sector, I think that Consumer Discretionary (XLY) is more bullish.
XLK is on the overbought side for the Price Momentum Oscillator (PMO). My biggest issue is that volume isn't actually supporting the breakout all-time highs. Notice that the first two OBV tops show rising tops. Compare last month's price top to the previous two and you can see it is much higher. Unfortunately, the OBV didn't show the same breakout. Additionally, notice the very overbought weekly PMO in the second chart below. Remember, I'm not bearish on XLK; I just think that Consumer Discretionary (XLY) looks much better.
Now, let's look at Consumer Discretionary. Unlike XLK, the PMO is not overbought. Volume is supporting the breakout. Notice that the current price top is above the previous price tops and, with that last price breakout, we see the OBV breaking out. The SCTR is "mid-range" and is trending higher. I think the weekly chart is very bullish as well. The weekly PMO is about to generate a BUY signal and is not overbought.
Conclusion: I'm bullish going into the New Year on the market in general. My sector pick for the next quarter would have to be XLY.
Watch new episodes of DecisionPoint with Carl & Erin Swenlin LIVE on Mondays 5pm ET or on the StockCharts TV YouTube channel here! (There will not be an episode this coming Monday as the show is on hiatus for the holidays.)
Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
erinh@stockcharts.com
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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