By Michael Nauss, CMT, CAIA, CDMS
1/ S&P Holds Its Ground
2/ “Risk Off” Outperforms
3/ Utilities at a Key Level
4/ Golden Bull Flag
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1/ S&P Holds It Ground
After a volatile day yesterday, the S&P 500 (SPY) was able to hold on to the prior day’s lows, rallying for most of the day.
2/ “Risk Off” Outperforms
The S&P 500 is broken down by which sector the companies within it operate. Looking at these individual sectors gives insight into where money is flowing into and out of, which can be a good gauge of sentiment.
In the graph below, you can see a list of all sectors (and some other ETFs) sorted by their percent return in today’s trading. Looking at the top names, you can see Gold (GLD), Utilities (XLU), and Healthcare (XLV). These names are considered to be risk-off assets where investors put more money in if they are worried about the market direction.
3/ Utilities at a Key Level
Utilities are often considered “safe” assets since they generally pay out much of their profits as dividends and income levels are usually secure. Regardless of what’s going on in the market, people need power.
$60 a share in the utilities (XLU) is a significant level for the index. As long as we remain above that level, we can be bullish.
4/ Golden Bull Flag
Another “flight to safety” instrument is Gold (GLD). We see the typical bull flag pattern. Technicians use this pattern to watch for possible trend continuation. The level to watch here seems to be around $180.
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