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Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
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Technical Outlook - US Industry and Sector trends
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary:
Medium-term analysis of some of the main Industries and Sectors in USA. Charts are all weekly time period and ETF’s are being used.
This Industry analysis is planned to be updated bi-weekly and/or when there are some interesting developments. This analysis is planned to include just short comments and explanations with direction and key support and resistance levels.
Semiconductor
Technical picture for SOXX is unchanged from last week:
Inverted Shoulder-Head-Shoulder pattern formed. SOXX has broken above the Neckline thus confirming the pattern with a potential target at around 501.
But for now SOXX has been rejected at the strong resistance at around 434.42. A test of the Neckline from the upper side could be seen. Such a scenario is not unusually, however (where price is testing the break out trendline from the other side) and it is called a Throw Back.
If price closes below the Neckline the S-H-S pattern is demolished and further down wards move should be expected, but if it is being rejected and resumes break out direction pattern is still valid.
If SOXX can close above the 434.42 resistance there is upside to 500.
Technical picture for SOXX is unchanged from last week:
Inverted Shoulder-Head-Shoulder pattern formed. SOXX has broken above the Neckline thus confirming the pattern with a potential target at around 501.
But for now SOXX has been rejected at the strong resistance at around 434.42. A test of the Neckline from the upper side could be seen. Such a scenario is not unusually, however (where price is testing the break out trendline from the other side) and it is called a Throw Back.
If price closes below the Neckline the S-H-S pattern is demolished and further down wards move should be expected, but if it is being rejected and resumes break out direction pattern is still valid.
If SOXX can close above the 434.42 resistance there is upside to 500.
Industrial
Medium-term Industrial is forming a rising wedge like pattern which is normally a reversal pattern. RSI divergence indicates a reversal. A close below lower rising trendline will confirm a reversal.
However, Industrial is still in an uptrend and can move higher before breaking out bearish.
If RSI closes above its falling trendline it will strongly suggest Industrial will move towards previous peak at 107.88.
Energy
Energy bounced off support at around 82.65 and could be set to resume uptrend. If Energy moves back above 21 weekly Moving Average and RSI closes above 60 threshold there is likely to be further upside for Industrials.
A close below 82.65 and Energy is likely to test the lower rising trendline. With a break below the trendline a move down to around 66.68 is in the cards.
55 weekly Moving Average acts a good guide for the medium-term trend. As long as Energy stays above the uptrend seems to be intact.
Oil & Gas
Oil & Gas is back above the rising trendline and the 55 Moving Average after a bounce from the support around 125.40.
If RSI closes above its falling trendline it will be a good indication that the sector will move higher. A close above 146.76 will confirm uptrend has resumed.
However, Oil & Gas could be forming a symmetrical triangle like pattern i.e. trading sideways in a more and more narrow range next few weeks.
Another break below the lower rising trendline followed by a close below 125.40 will confirm downtrend.
Metals and Mining Industry
Still in an uptrend forming what appears to be a rising wedge pattern. Do divergence on RSI indicating we are likely to see higher levels in Metals & Mining. Sector ETF is above both 21 and 55 weekly Moving Average adding to the bullish picture.
For Metals & Mining to reverse the trend a close below 52.85 is needed. A break below lower rising trendline could be first indication of that scenario to play out.
Still in an uptrend forming what appears to be a rising wedge pattern. Do divergence on RSI indicating we are likely to see higher levels in Metals & Mining. Sector ETF is above both 21 and 55 weekly Moving Average adding to the bullish picture.
For Metals & Mining to reverse the trend a close below 52.85 is needed. A break below lower rising trendline could be first indication of that scenario to play out.
Financial
Financials is technically in an uptrend but is struggling for momentum. RSI is still below 60 and needs to close above for Financials to really take off. If Financials drops back below 55 weekly Moving Average the sector could resume downtrend . A down trend will be confirmed if closing below 33.19.
Transportation
Transportation is trading in a rising channel pattern. Uptrend intact but could be challenged if breaking below lower rising trendline.
If Transportation breaks below the lower trendline the support at 223.30 will be key. 200 weekly Moving Average will provide support .
Technology
Broken above medium-term falling trendline and has established an uptrend. After a minor correction the sector is back above 55 weekly Moving Average.
However, RSI has not yet confirmed the uptrend so far failing to close above 60 threshold. If Technology closes below 134.90 uptrend has been reversed and the falling trendline is likely to be tested. A close below the trendline support at around 120 will be next. Uptrend resistance at around 152
Broken above medium-term falling trendline and has established an uptrend. After a minor correction the sector is back above 55 weekly Moving Average.
However, RSI has not yet confirmed the uptrend so far failing to close above 60 threshold. If Technology closes below 134.90 uptrend has been reversed and the falling trendline is likely to be tested. A close below the trendline support at around 120 will be next. Uptrend resistance at around 152
Materials
Materials is in an uptrend bouncing from the 55 weekly Moving Average. With the higher close last week uptrend is confirmed and Materials are set for a move higher.
If Materials closes below 55 Moving Average and below lower rising trendline there is risk to the down side. Support at 78.85 and key support 76.65.
However, RSI has not yet managed to turn to positive sentiment being rejected at 60 threshold a couple of times. A close above will confirm the currently fragile uptrend with a potential to previous peaks around 90-92
Materials is in an uptrend bouncing from the 55 weekly Moving Average. With the higher close last week uptrend is confirmed and Materials are set for a move higher.
If Materials closes below 55 Moving Average and below lower rising trendline there is risk to the down side. Support at 78.85 and key support 76.65.
However, RSI has not yet managed to turn to positive sentiment being rejected at 60 threshold a couple of times. A close above will confirm the currently fragile uptrend with a potential to previous peaks around 90-92
Utilities
Dipped below 200 weekly Moving Average to the 0.786 retracement but has managed to close back above 200 MA. If Utilities can close above 68.80 there could be upside to around 72.50-75.00.
A close below the 200 weekly Moving Average is likely to result in Utilities extending downtrend with 2022 lows around 60 as first target.
RSI is showing negative sentiment that could accelerate if RSI breaks back below 40. For Utilities to reverse the downtrend a close above 72.50 is needed with first indication of that scenario to play out would be a close above 68.80
Dipped below 200 weekly Moving Average to the 0.786 retracement but has managed to close back above 200 MA. If Utilities can close above 68.80 there could be upside to around 72.50-75.00.
A close below the 200 weekly Moving Average is likely to result in Utilities extending downtrend with 2022 lows around 60 as first target.
RSI is showing negative sentiment that could accelerate if RSI breaks back below 40. For Utilities to reverse the downtrend a close above 72.50 is needed with first indication of that scenario to play out would be a close above 68.80
Retail
Was rejected at 75.80 after triangle break out. The uptrend is seriously challenged with retail currently below the 55 weekly Moving Average. If Retail closes below the 200
If Retail is likely to test the 55 weekly Moving Average and the falling trendline in the triangle it is likely to turn bearish.
RSI is still showing positive sentiment, however, indicating what we are seeing could just be a correction. But for now it is wait and see.
Health Care
Below 55 weekly Moving Average and dipped below 0.618 retracement and strong support at 127.80 only to close above. The close above the strong support is an indicating that Health Care could reverse the downtrend. RSI bounced off the 40 threshold i.e., still showing positive sentiment.
To push RSI into negative sentiment and extend the down trend a close below 127.80 is needed.
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