Key sectors hit new highs

Three of the four offensive sectors moved to new reaction highs. The Industrials SPDR (XLI) led the charge on Monday with a 1.35% gain on the day. The Consumer Discretionary SPDR (XLY), which is the most economically sensitive sector, hit 30 for the first time since September 2008. The Technology SPDR (XLK) also trading at its highest level since September 2008. The trend is clearly up with all three hitting new 52-week highs this week. New 52-week highs happen in uptrends, not in downtrends. Having said that, all three have moved sharply higher since early December and are short-term overbought. While seasonality remains bullish, the easy part of the move may be past already. Most ETF have been zigzagging higher since mid August. This means that pullbacks occur soon after new reaction highs.

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