Healthcare SPDR Hits Support Zone

All sectors are down over the last two months, but some are down less than others. Of the nine sector SPDRs, the Consumer Staples SPDR (XLP) and the Healthcare SPDR (XLV) are holding up the best. Relative strength in these two defensive sectors confirms that the market is currently in risk-averse mode. The chart below shows the Healthcare SPDR declining the last five weeks with a falling channel. This channel defines the downtrend and prices need to break the channel to reverse the downtrend. Even though we have yet to see a reversal, there are signs of support as the ETF nears the August consolidation and the 50% retracement. Also notice that XLV led the sectors on Friday with the biggest bounce - although the bounce was rather modest. The indicator window shows the Commodity Channel Index (CCI) moving lower since early September. A break above the red trend line and a move into positive territory would signal a bullish reversal in momentum.

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