Can This Sector Tumble Even Further?

A welder working on a steel piece at a metal fabrication company on August 7, 2018 in Orange County, New York. (Photo by Waring Abbott/Getty Images)

A welder working on a steel piece at a metal fabrication company on August 7, 2018 in Orange County, New York.
Photo by Waring Abbott/Getty Images)

 

In last Sunday’s “Should You Be Looking For More Sector Trouble?” I featured a table that featured my sector analysis. The table (link) showed that the weekly relative performance had turned negative on XLP, XLI, XLB, and IYT.

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TomAspray-ViperReport.com

The Materials Sector Select (XLB) started off April on a strong note as it rallied sharply back to the long term downtrend (line a) where the rally appears to have stalled. XLB is still up 2.8% for the month but was down 1.30% last week. The next good support is at $55.24 and the rising 20-week EMA. The QPivot is at $53.69 and a weekly close below this level would be consistent with a trend change.

The weak action in the relative performance has kept me from getting too excited about XLB. The weekly RS has not been able to get above its resistance (line b), which is needed to indicate that XLB has started to lead the S&P 500. The close below the weekly RS last week is not a good sign.

The weekly OBV also turned lower last week after reaching its resistance (line c) from last September. The key test is whether it can hold above its WMA. The daily technical studies are mixed and do not indicate that the correction is over.

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