Today's Hot Topics   ▲  |  ▼

Sector Focus
The iShares Dow Jones Transportation (IYT) had another good week, gaining almost 1.7% and closing just below the next resistance at $101.60, which was the 2011 high.

There were several standout sectors last week, as the Select Sector SPDR Energy (XLE) and Select Sector SPDR Consumer Discretionary (XLY) both gained over 2%.

Last week's article "Will This Be February's Hot Sector?" focused on crude oil and its seasonal tendency to bottom in late January and early February. Currently, XLE is overextended, and investors should wait for a sharp pullback to buy. I do like several of the individual energy stocks.

Click to Enlarge

The Select Sector SPDR Consumer Discretionary (XLY) shows a strong uptrend from the late December low, as it continues to make new highs. The quarterly R1 at $49.70 has been reached, with the R2 at $51.02.

The relative performance is now back to the late November highs and is well above its rising WMA. The RS line broke through its resistance (line c) in November. The OBV looks even stronger, showing a series of higher highs, and is well above good support (line d). The 20-day EMA is at $48.55.

The Select Sector SPDR Industrials (XLI) was also strong last week, up about 1.9%. It has accelerated to the upside in early 2013. The 2011 highs were overcome, and the 2007 highs are close at $41.99. It was one of my favorite sectors in early December, after breaking through resistance (line e).

The relative performance shows a series of higher highs, but may be losing some upside momentum. The on-balance volume (OBV) does look stronger, as it completed its base toward the end of November and has been rising steadily since.

The Select Sector SPDR Health Care (XLV) made further new highs last week, but was up only 0.8% at the close. The Select Sector SPDR Financial (XLF) was down slightly, while the Select Sector SPDR Technology (XLK) lost 1%.

Crude Oil
The March crude oil contract gained $1.50 per barrel last week, and continues to act well and stronger than the energy sector. The next major resistance is in the $100 area.

Click to Enlarge

Precious Metals
The SPDR Gold Trust (GLD) gained $2 last week and closed back above its 20-day EMA. In December, it hit a low of $158.39, which corresponded to the 61.8% Fibonacci support level from the June 2012 high as well as the equality target (100%) using the decline from the October highs to the November lows.

This could be an important low, but the daily technical studies have not yet given new buy signals. For example, the OBV did make lower lows, and has just barely broken its downtrend (line a). Therefore, one more new low is still possible, but I will be watching closely.

The Global X Silver Mines ETF (SIL) has started to turn lower, and closed weak. We are using a tight stop on longs, and it needs to close above the quarterly pivot at $23.62 to complete its bottom.

The Week Ahead
There isn't really any change in our outlook this week, but if the Spyder Trust (SPY) moves convincingly above $150, I would turn a bit more cautious unless we see some upward acceleration.. If there is a temporary plan on the debt ceiling, the rally could pick up steam.

In the update to the Charts in Play Portfolio last week, I recommended taking some partial profits on some positions at higher levels. I would suggest that if you have some nice double-digit gains in some positions, consider selling part of your position on strength, as a correction is likely in the next month or so.

I recommended several new stocks and ETFs last week and have several open orders. I continue to favor stocks close to support, where the risk can be kept reasonably low.