RCD CHALLENGES RESISTANCE, HEALTHCARE IS THE STRONGEST, MRK, GILD AND JNJ LAG, ABBV AND BMY LEAD, BASE METALS ETF CHALLENGES RESISTANCE, XME EXTENDS UPSWING, STEEL ETF BREAKS OUT, GOLD SURGES

EQUAL-WEIGHT CONSUMER DISCRETIONARY CHALLENGES RESISTANCE... Link for today's video. A funny thing happened on the way to new highs last week. The S&P 500 recorded a new high last week, but only one sector SPDR recorded a new high and only one equal-weight sector ETF hit a new high. Of the nine sector SPDRs, only the Consumer Discretionary SPDR (XLY) hit a new high last week. Note that the Technology SPDR (XLK) joined with a new high on Monday. Thus, only two of the nine have confirmed the new high in the S&P 500. Of the nine equal-weight sector ETFs, only the Equal-weight Healthcare ETF (RYH) hit a new high last week. XLY can thank Amazon (AMZN) because the stock accounts for around 7% of the ETF and was up 14% on Friday. Also note that Starbucks accounts for 3.27% and was up 4.88% on Friday. Chart 1 shows XLY breaking out of a consolidation and hitting a new high. New highs are bullish and affirm the uptrend with the March-April lows marking first support in the 74-75 area. The indicator window shows the StockCharts Technical Rank (SCTR) above 90. Note that XLY has the second highest SCTR of the nine sector SPDRs.

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Chart 1

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Chart 2

Chart 2 shows the Equal-Weight Consumer Discretionary ETF (RCD) within an ascending triangle consolidation. This is a bullish continuation pattern and the bigger trend is clearly up, but we have yet to see a breakout and new high. In other words, the equal-weight version has yet to confirm the large-cap version. At this point, I would call this a minor non-confirmation because RCD hit a new high in March, is close to a new high right now and in a clear uptrend. Broken resistance, the March lows and a buffer mark key support in the 88-90 area.

EQUAL-WEIGHT HEALTHCARE IS THE STRONGEST... Chart 3 shows the Equal-weight Healthcare ETF (RYH), which is arguably the strongest sector ETF in the stock market right now. As of Friday's close, its SCTR was 95.5 and the highest of the sector SPDRs and the equal-weight sector ETFs. The trend is clearly up because the ETF hit a new high, the 20-day EMA is above the 125-day EMA and the 125-day EMA is rising. The early March consolidation and early April low mark first support in the 150-152 area.

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Chart 3

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Chart 4

Even though the HealthCare SPDR (XLV) did not record a new high, it is still in a clear uptrend and by no means weak. Chart 4 shows XLV surging in October-November and then working its way higher the last five months. The March-April lows mark a support zone in the 70-71 area. The SCTR is around 90 and about 5 points lower than the SCTR for RYH.

MERCK AND J&J LAG... The XLV chart above shows the top ten stocks and their weightings in the sector SPDR. Note that Johnson & Johnson (10%) and Merck (5.82%) account for more than 15% of the ETF. Chart 5 shows a performance SharpChart for these ten stocks and four are down since early March (ACT, GILD, JNK and MRK). Weakness in four of the ten is clearly weighing on XLV. Notice that AbbVie (ABBV) is the leader with a 10% gain and Bristol Meyers (BMY) is in second place.

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Chart 5

ABBVIE AND BRISTOL MEYERS LEAD... Chart 6 shows AbbVie firming in the 55-56 area from February to early April and breaking out with a big move the last three weeks. The stock is short-term overbought after a 17% move, but the bigger trend is clearly up right now. Notice that the 20-day EMA moved back above the 125-day EMA and the 125-EMA turned up. Broken resistance marks first support in the 60-62 area. The indicator window shows the SCTR breaking above 60 just before the stock broke out. The StockCharts Technical Rank (SCTR) ranges from zero to one hundred. I view relative performance as net positive after a break above 60 and remain so until a counter signal with a break below 40. One could use 50 as the bullish-bearish threshold, but this will result in whipsaws. Adding a 10 point buffer reduces whipsaws and signals last longer. Chart 7 shows BMY surging in October and then working its way higher the last five months.

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Chart 6

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Chart 7

BASE METALS ETF GOES FOR A BREAKOUT... Chart 8 shows the Base Metals ETF (DBB) breaking above a resistance zone with a surge over the last two days. The Raff Regression Channel and March high marked resistance in the 15.5-15.85 area. DBB has only three metals with relatively equal weightings: aluminum (32.1%), copper (32.64%) and zinc (35.27%). Zinc is up over 10% in April and trading at its highest level of the year. John Murphy featured copper on Friday and showed Spot Copper ($COPPER) bouncing off the rising 50-day moving average. Chart 9 shows Copper ETN (JJC) breaking above the upper trend line of a falling wedge. Also notice that the ETF found support after a 50% retracement and formed a higher low. The indicator window shows MACD holding above zero since late February. A move below 32 in JJC and zero in MACD would negate the breakout.

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Chart 8

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Chart 9

XME EXTENDS SHORT-TERM UPTREND... Chart 10 shows the Metals & Mining SPDR (XME) getting a bounce within a bigger downtrend. Note that the indicator window of the DBB chart showed the Correlation Coefficient (DBB,XME) in positive territory for most of the last eight months. This means XME and DBB move in the same direction and a breakout in DBB would be positive for XME. Turning back to XME, the big trend is clearly down because the ETF hit new lows in March and remains below the February high. The indicator window shows the SCTR holding below 20 since late September. Turning bullish now would still be a bottom picking exercise because the bigger forces at work are still bearish. The Raff Regression Channel and February high mark long-term resistance in the 30 area. Despite a long-term downtrend, the immediate trend, which is six weeks, is up so the bulls have a short-term edge as long as the late April low holds.

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Chart 10

STEEL STOCKS LEAD METALS AND MINING GROUP... Chart 11 shows a performance SharpChart with the top ten holdings for XME and the four leaders are US-based steel stocks. Steel Dynamics (STLD), Reliance Steel and Aluminum (RS), AK Steel (AKS) and US Steel (X) are the biggest gainers since early March. Chart 12 shows the Steel ETF (SLX) breaking above the February high to confirm a double bottom. Despite this breakout, the stock is still a relative laggard because the SCTR remains below 20. Yes, I know. I got SLX and XME wrong two weeks ago. Crow pie is an equal opportunity employer!

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Chart 11

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Chart 12

GLD CHALLENGES SHORT-TERM RESISTANCE... Chart 13 shows the Gold SPDR (GLD) erasing Friday's loss and surging to the mid April highs. Notice that a higher low could be forming because GLD reversed in the 50-62% retracement zone. I am still looking for some follow through and am marking resistance in the 115.5-116 area. A close above 116 would complete the short-term breakout and argue for a continuation of the prior advance (110 to 117). The indicator window shows the MACD Histogram still in negative territory. A little follow through is needed to push MACD above its signal line for a bullish momentum signal.

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Chart 13

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Chart 14

Chart 14 shows the Silver ETF (SLV) surging off support with a 4% advance. Notice that this support zone marks neckline support of a continuation head-and-shoulders pattern. Today's surge off support puts this bearish pattern on hold.