Rotation vs Rollover

I posited last night that there were signs of a rotation into Utilities and gave some thoughts on which ones looked good for a rise in price (link below). But I did not explain why I thought it was a Rotation and not a Rollover. The answer lies in the difference between the daily and weekly charts. The daily chart of the Technology Select Sector SPDR, $XLK, shows a Relative Strength

Index (RSI) that is bullish but overbought near 80. The trend is higher but a pullback or sideways consolidation in the near future looks likely. The Utilities Select Sector SPDR, $XLU, shows a rise off of a base with the RSI rising and bullish and the MACD crossing positive. There is plenty of room higher. This shows the stalling with $XLK and rising of $XLU, a relative flow from one to the other. This could be either a Rotation or Rollover. The answer lies in moving out to the weekly

charts. Notice that the weekly chart for $XLK shows no indication that it may pullback soon with the RSI bullish and still under 75 while the MACD is positive and growing. The trend is beautiful rising line progressing higher along the expanding Bollinger bands. Sweet! But the $XLU

is holding up on the weekly chart quite well. The RSI is bullish and kinking higher while the MACD is now improving toward a bullish cross higher. It has a positive set up but not nearly the strength that the daily chart is showing. The $XLK looks much stronger on this time frame.

And the $XLU not as strong. Strength on the daily chart with less on the weekly for the $XLU and strength on the weekly chart with an extended look on the daily chart for $XLK. Rotation vs Rollover.

Next Rotation: Utilities

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Dragonfly Caps Blog