Larry’s Note: Tonight, join me as I go live about a market shock that’s just days away…
Volatility has been rough this year, and this shock could send it even higher. As much as $1 trillion is about to change hands in a single day.
But if we can get into position early, then there’s a way we can turn this situation to our benefit. In fact, I know the best way to play it… using just one ticker.
At 8 p.m. ET tonight, I’ll explain exactly what’s coming – and even share the ticker.
To attend, all you have to do is RSVP right here. See you there…
The consumer discretionary sector is particularly vulnerable to rising interest rates
With four rate rises already this year – plus another big one likely to come at the Fed’s meeting on September 20-21 – consumer discretionary will remain under intense pressure as consumers continue to tighten their belts.
When we checked out the Consumer Discretionary Select Sector ETF (XLY) a few weeks ago (red arrow on the chart below), we saw that after falling nearly 40% this year, XLY had found a base for a rally…
However, that rally faltered as momentum petered out.
Today, we’ll discuss the action since then and take a look at what’s coming next…
A Common Bear Pattern
On the chart below, the 50-day moving average (MA – blue line) shows XLY’s long-term downtrend that kicked off at the start of the year…
Consumer Discretionary Select Sector ETF (XLY)
Source: eSignal
Apart from a brief period in March and April, the 10-day MA (red line) bearishly tracked below the 50-day MA for the duration of that down move.
Another common bear pattern throughout XLY’s down move was a series of lower highs (January, March, and June).
But the Relative Strength Index (RSI) trended higher through June and July. That helped XLY form a base (red horizontal line).
Then, two bullish patterns confirmed XLY’s emerging rally…
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The RSI broke back into the upper half of its band (green line).
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The 10-day MA crossed back above the 50-day MA.
However, that promising rally topped out on August 16 when XLY ran into a common reversal pattern…
XLY made higher highs (upper orange line) while the RSI indicated momentum had peaked (lower orange line).
When these are heading in different directions, we know that a reversal is likely in the cards.
And that’s exactly what happened…
The RSI reversed downward, bringing XLY’s stock price with it. That move saw the RSI tracking right down on top of support.
For XLY to have any chance of resuming its recent rally, the RSI had to hold support. A break below support would mean that XLY’s pullback had further to go.
The latter of these two scenarios is currently playing out. And the RSI could test oversold territory (lower grey dashed line).
So, what can we expect from here?
Let’s take another look at the XLY chart…
Consumer Discretionary Select Sector ETF (XLY)
Source: eSignal
The longer that the RSI stays in the lower half of its band, the longer this down move will continue.
A prolonged move in this lower band could see XLY re-test its June lows.
This move could provide the setup for a potential short trade.
The other thing I’m watching is our two moving averages…
Right now, the 10-day MA is closing in quickly on the 50-day MA.
The 10-day MA breaking below the 50-day MA would add confirmation to XLY’s down move… and a short trade.
Prepare for a Shock
While XLY’s chart pattern looks promising for a potential trade, it’s not the only one I’m gearing up for right now…
There are other trade deals with a massive shock that’ll hit the markets over the coming week.
While most people have no idea it’s coming, Wall Street insiders have been preparing for this shock for weeks.
That’s why tonight at 8 p.m. ET, I’m holding an urgent briefing to show investors what’s going on behind the scenes… and how they can turn this upcoming volatility into potentially huge gains using just one ticker.
After one of the toughest markets in years, those who act quickly could use this event to turn any “red ink” in their portfolios back into the black.
Please don’t miss this urgent briefing. To reserve your spot, simply go right here.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict
Reader Mailbag
In today’s mailbag, a One Ticker Trader member thanks Larry for this trading program…
I’m one of your supportive subscribers of the One Ticker Trade program. I made profits on all the three QQQ suggested alerts in August by following your alerts… for which I wish to say a big thank you again!
– Michael S.
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