“You can go your own way!” was famously sung by Fleetwood Mac and for the moment that’s exactly what the Technology and Utility sectors are doing right now.
Let’s take a look at these diverging ETFs, one of which flashed green and the other flashed red in our model.
We’re seeing the XLK Technology ETF (top) and the XLU Utilities sector ETF on the Daily Chart.
We have a color-rule algorithm based on Average True Range that defines the “swings” (up and down) in price.
While these funds – and all Sector SPDR ETFs – are strongly positively correlated, sometimes they diverge.
We can pick up on signals or clues from these departures from the norm – when funds “go their own way.”
Technology stocks have rallied strongly into August, continuing the uptrend with the market.
However, Utility names – which are thought to carry safety similar to bonds – diverged with a strong sell swing. Continue Reading…