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Five S&P 500 Sectors Have Rising Wedge Breakdowns

Published on April 21, 2020 at 03:29 PM by Carl Swenlin

DecisionPoint Alert

The S&P 500 component stocks are divided into eleven sectors, and five of them have rising wedges that have broken down. A rising wedge is a bearish formation, and, even in a bull market, it will resolve downward more often than not. In a bear market the odds of a negative resolution are even higher. The four sectors with rising wedge breakdowns this week are Consumer Staples (XLP), Health Care (XLV), Industrial (XLI), Technology (XLK), and Utilities (XLU). I wrote about XLK and XLU last week.


Consumer Staples: The wedge was pretty tight, but there was an overbought PMO and two short-term negative divergences, increasing the likelihood of a negative resolution.


Health Care: Here's another narrow wedge, and it tried to break upwards, but that effort reversed on Monday. Price broke down on Tuesday. Also, another overbought PMO.


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Industrial: Not as profound as the other examples in this article, but a wedge breakdown nonetheless.


Technology: Three negative divergences emphasize the technical erosion.


Utilities: The rising wedge itself was the only overt negative evidence preceding the April top.


CONCLUSION: Once a rising wedge breaks down, there is no certainty that price will continue to decline, but considering that the remaining six S&P 500 sectors are showing various manifestations of negative activity, not to mention the worst fundamental conditions I've ever seen, I think we should look for the March lows to be retested.

Note: Charts were made prior to today's close.


Technical Analysis is a windsock, not a crystal ball.


Helpful DecisionPoint Links:

DecisionPoint Alert Chart List

DecisionPoint Golden Cross/Silver Cross Index Chart List

DecisionPoint Sector Chart List

DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

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