{"id":10681,"date":"2018-07-16T07:30:37","date_gmt":"2018-07-16T11:30:37","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=10681"},"modified":"2018-07-16T07:30:37","modified_gmt":"2018-07-16T11:30:37","slug":"dont-ignore-this-months-market-benchmark","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/dont-ignore-this-months-market-benchmark\/","title":{"rendered":"Don\u2019t Ignore This Month’s Market Benchmark"},"content":{"rendered":"

The stock market is on fire so far in July.<\/p>\n

The S&P 500 is up 3% already this month, and lots of folks are talking about a “breakout” and a move back up to new all-time highs. But if the market is to do that, then it’s going to need some help from the financial sector.<\/p>\n

Two weeks ago, I wrote about how the financial sector was “The Sector to Watch This Month.”<\/a> The Financial Select Sector Fund (XLF) had dipped below its lower Bollinger Band<\/a>. And, most of the time when that happens, XLF tends to reverse higher right away.<\/p>\n

So, we saw that as a good sign for financial stocks. And since the financial sector tends to lead the broad stock market, a rally in XLF should lead to a rally in the stock market.<\/p>\n

So far, so good. XLF has had a nice bounce over the past two weeks.<\/p>\n

But that bounce is now stalling. XLF is struggling near resistance. And that could be a sign of trouble ahead.<\/p>\n

Take a look at this updated chart of XLF…<\/p>\n

\"\"<\/p>\n

Right now, XLF is trading right in the middle of a descending triangle pattern. If it can break out above the resistance<\/a> of its 50-day moving average<\/a> and the downtrending resistance line of the triangle (both at about $27.40 per share), then it could spark a strong rally for the financial sector – which, in turn, would spark a strong rally in the broad stock market.<\/p>\n

On the other hand, if XLF breaks down from the triangle, by closing below $26.50 per share, then it’s likely headed lower. And a selloff in XLF will likely cause a selloff in the broad stock market.<\/p>\n

Two weeks ago, we gave the bulls the benefit of the doubt. Now, though, it looks to me like the bears may have the edge.<\/p>\n

Despite a rally in the stock market on Friday, bank stocks traded poorly. XLF lost 0.44%. That’s not the sort of action that’ll lead the stock market to a breakout move higher. Indeed, it just might be the sort of action that points to an impending reversal.<\/p>\n

The jury is still out. XLF is still inside its triangle pattern. So, in theory, it could break either way. But if we’re going to get a breakout rally in the stock market, then XLF needs to start moving higher right away. Otherwise, the market may be nearing the end of its summertime rally phase.<\/p>\n

So, just as I said two weeks ago, the financial sector is the sector to watch in July.<\/p>\n

Best regards and good trading,<\/p>\n

<\/p>\n

Jeff Clark<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

In today’s mailbag, a frequent reader uses the value of the Minute<\/em> to full advantage…<\/p>\n

\n

I placed a trade on USO and purchased a small position on some puts based on your essay on oil<\/a>. I was able to close those out for decent 30% gain on Tuesday.<\/p>\n

Not sure if I chose the best strategy, and was losing some value in those options prior to the drop in oil, but I was happy to take the gain! Thanks for putting that out there!<\/p>\n

– Ryan<\/strong><\/p>\n<\/blockquote>\n

How have you profited from reading Jeff’s daily letters? Or, what’s the most valuable thing you’ve learned?<\/p>\n

Click here<\/a>, or simply reply to this email, to let us know.<\/p>\n","protected":false},"excerpt":{"rendered":"

Two weeks later, and this sector is still the one to watch…<\/p>\n","protected":false},"author":34,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-10681","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/10681","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/34"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=10681"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/10681\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=10681"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=10681"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=10681"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=10681"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=10681"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=10681"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=10681"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}