With the damage last week, I'm going to look at each of the market sectors in the following order: largest YTD gain to smallest YTD gain. The totals are from stockcharts.com's "perf" charts function. My thought here is some fund managers who have done well this year may be looking to lock-in some profits in the market areas where they have solid gains.
The XLE's are up 27.23% YTD. On Friday the ETF moved decisively through the 10 and 20 day SMAs on heavy volume. In addition, the ETF moved through previous highs in mid-July. In one day this ETF took out some very levels of technical support. There is a lot of technical noise in the 74-76 area that could provide support. Additionally, the ETF could still find some support from the mid-July highs.
The XLB's are up 20.4% this year. This chart looks like it has formed a double top with the first top in mid-July and the second top in early October. Notice this chart has
1.) Broken the uptrend established after the Fed cut rates
2.) Couldn't make significant gains about the mid-July highs
3.) Formed a bearish engulfing pattern on heavy volume on Friday
4.) Has moved through the technical support of the 10 and 20 day SMA
Short version: there are a lot of bearish signals on this chart.
The XLKs are up 16.96% YTD:
This sector has rallied since mid-August. However, on Friday this ETF
1.) Broke the uptrend
2.) Went through the 10 and 20 day SMAs
3.) Both 1 and 2 occurred on heavy volume.
This ETF does have support from the high established in mid-July. In addition, tech has received some generally favorable press lately with some good earnings reports.
The XLI's are up 14.54% YTD. Once again, we have a double top formation. In addition, this ETF has already attempted to rally through the 20 day SMA and failed. Now it has fallen back to the 50 day SMA on heavy volume.
The XLUs are up 8.99% YTD. This chart has broken the uptrend started in late August and has fallen through the 10, 20 and 50 day SMAs. Now it is resting on the 200 day SMA.
The XLP's are up 6.75% YTD. Here we have another double top. We also have an average that has moved through the 10 and 20 day SMAs on heavy volume. The ETF printed a strong bearish bar on Friday.
The XLV's are up 5.47% YTD. This ETF has broken a strong uptrend and fallen through the 10 and 20 day SMAs. The ETF printed a strong bearish bar on Friday.
The XLY's are down 6.02% YTD. This ETF is already below the 200 day SMA -- bearish technical territory. In addition, the ETF has broken an uptrend and the price is below all the SMAs. On Friday this ETF printed a very strong downward moving candle.
The XLF's are down 10.61% YTD. Just like the XLY's, this ETF is below the 200 day SMA, which is technically bearish. The ETF sold-off again on Friday and prices are below all the SMAs. Friday the ETF printed a strong downward moving candle on high volume.
So what have we learned? Most ETFs are in poor technical shape. Many moved through the short-term SMAs on Friday on solid volume while printing large bearish candles. Two areas of the market (Financials and Consumer Discretionary) are already in bearish territory. The rest of the market is barely holding on. The one area that could provide some relief is technology (which is best read as "not mortgage or housing related"). Aside from that, even the safer areas of the market like Utilities and Health Care are moving lower right now.
