Sector Spotlight: Rotation in the Defensive Sector is Gathering Momentum

On this edition of StockCharts TV’s Sector Spotlight, asset class level stocks are still beating bonds, but the pace is slowing down. The big H&S pattern in EUR/USD, which suggested strength for the USD, is still there but lost a bit of its appetite.

Sector rotation looks to be getting a little bit more in line again. I look at the current rotations on the daily RRGs and put them into perspective on the weekly version. Next, I zoom in on the defensive sectors, Utilities and Staples, which are now back on track and both traveling towards the leading quadrant. Technology is not able to get out of its sideways range on the RS-graph and is in danger of weakness ahead. Consumer Discretionary is now rotating back to lagging while inside the improving quadrant, which is usually a reliable pointer for more weakness ahead. This guidance is supported by a rising wedge pattern that is currently forming in the price chart of XLY. Once executed, this will very likely trigger an acceleration lower for the Discretionary sector.

This video was originally broadcast on September 14, 2021. Click anywhere on the Sector Spotlight logo above to view on our dedicated Sector Spotlight page, or click this link to watch on YouTube. You can also check out the video on the StockCharts TV on-demand website StockChartsTV.com, or on the associated app on mobile platforms like iOS and Android, or TV platforms like Roku, Apple TV, Amazon Fire TV and Chromecast.

Sector Spotlight airs weekly on Tuesdays at 10:30-11:00am ET. Past episodes can be found here.

#StaySafe, -Julius