The J Lo Relationship Model for Stock Sector Selection

• Posted by Greg Harmon
• on July 18th, 2011

The first thing that struck me this past week was how resilient the market was Friday despite the horrid news that J. Lo and Marc Anthony had called it quits. I guess maybe the pros saw this coming, but it hit me hard and got me thinking about all of Jennifer Lynn Lopez’s relationships. There was that doomed from the start marriage to Ojani Noa when she was still Jenny from the block. This was followed by a fling with P. Diddy, then still known as Sean Combs, the mogul that keeps going despite set backs. Off of that J. Lo married a back up dancer Cris Judd. A back up dancer? Okay maybe it was worth a little rolling around with his hot dancer body but marriage? Well he learned he was being kicked back into the shadows when she started dating Beniffer while still married, ouch. Beniffer, Ben Affleck, was a star at the time (sorry if you are reading this Ben, you are not anymore) her second try at sharing the spotlight, but a step lower. And as that ended of course the final chapter with Marc Antonio Muniz, or Marc Anthony, He was a latin singer little known outside of that circle, and he will no doubt revert to that same status. Oh what a life. Isn’t it interesting how the Select Sector SPDR funds parallel her love life? Let me explain.

P. Diddy

The sector most like P. Diddy, resilient, keeps coming back, is the Energy Select Sector SPDR, $XLE.

Energy Select Sector SPDR, $XLE

From the chart above you can see it started the week lower but had a great come back on Friday. As it did so the Relative Strength Index (RSI) is turned higher and the Moving Average Convergence Divergence (MACD) indicator started to climb again. These both support further upside.

Bennifer

A far step back but still positive in their own right, like Ben Affleck, are the Materials Select Sector SPDR, $XLB and Technology Select Sector SPDR, $XLK. Using the chart for the $XLK to illustrate

Technology Select Sector SPDR, $XLK

you notice that the pullback for the week settled in after Monday’s drop and exhibited some positive signs Friday. Volume was up, price held above all of the Simple Moving Averages, the RSI held above the mid line and the MACD remained positive. Not a bad second string of sectors.

Marc Anthony

The Consumer Staples Select Sector SPDR, $XLP and Utilities Select Sector SPDR, $XLU are the sectors that most resemble Marc Anthony. They have talent but are not the sexy sectors that appeal to traders.

Consumer Staples Select Sector SPDR, $XLP

From the chart above for the $XLP the down fall may have been halted Friday with the hammer candle ($XLU was a doji) but needs to be confirmed, and the MACD is crossing lower suggesting more downside to come. There are some positive signs though with the SMA’s sloping higher and the RSI holding the mid line. A group to watch as they could go either way but still get the benefit of the doubt to the upside.

Cris Judd

Two further sectors are like Cris Judd, a good back up to the Marc Anthony’s perhaps. Talented but even more obscure. These sectors are the Industrials Select Sector SPDR, $XLI and Consumer Discretionary Select Sector SPDR, $XLY. From the chart below of the $XLI you can see that despite the

Industrials Select Sector SPDR, $XLI

hammer prints signaling a potential reversal if confirmed, the RSI for these has broken through the mid line and is sloping lower. The MACD is also crossed negative and the SMA’s are much flatter than those of the group just above. These are your back ups to the Marc Anthony’s, and like any back up dancer, just watch them.

Ojani Boa

The last two sectors, the Financials Select Sector SPDR, $XLF and Health Care Select Sector SPDR, $XLV, just seemed doomed like Ojani’s marriage was. From the chart of the $XLF below notice that the

Financials Select Sector SPDR, $XLF

price continues to move lower as the RSI and MACD both support more downside. The SMA’s are falling (not yet for the $XLV) and volume is increasing in the move down. Doomed. Stay away unless you are looking for shorts.

As you prepare for the week, feel sorry for these poor men cast aside by the superstar. Stick with the successful sectors, the P. Diddy’s and the Bennifer’s while keeping an eye on the Marc Anthony’s and Cris Judd’s. Perhaps her next chapter was foreshadowed in her latest video……

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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