Quick Note: I wrote this post with my friend Arun Chopra AKA @FusionptCapital.
In the spirit of Halloween we wanted to take a look at some of the spookiest charts we see. Let’s dig in.
The Trendline Break: XLP
Staples have been one of the best performing sectors since the start of the bull. The last few trading weeks have seen all of that change. A year long top has formed and now the 2016 high has been lost and the multi year uptrend has broken.
The Bearish Wedge: Hershey
We see the consumer staples as a group are under pressure and this is one of the most vulnerable stocks in the group. Enjoy your chocolate, but beware of the stock.
The Double Top: XBI
Biotechs went on a major run from ’09-’15, leading into what was essentially a blow off top. After the nearly 60% decline, the index has rallied back to resistance. How far does Biotech correct? Could this be a double top?
The Relative Strength Laggard: General Electric
GE had noticeably underperformed the entire market for years unable to get through its highs from 2000 and 2006. Now the price has started to break trend. In a market making new highs, this is as scary as it gets for a shareholder.
The dangerous divergence:
Industrial production and Transports are often highly correlated. The transports have gone on to new highs while the industrial production level is still below its cycle highs.