Heavyweight Divergence:

The two largest holdings in the XLY have been swimming down different destinations. TSLA, the 2nd largest name in the fund has encountered issues after combating the very round 300 number after recording a bearish WEEKLY engulfing candle the week ending 7/21 there. A real possibility is a move back toward the very round 200 number which would be a touch of the rising 200-day SMA. So far in August, it has risen just 2 sessions. Below is the chart of AMZN which is on a different trajectory off just 5% from its most recent 52-week highs (TSLA is 28% off its own annual peak). It is down 2% this week heading into Thursday and if it declines this week would be its first consecutive WEEKLY losses since February. On the WEEKLY chart, it has the look of a cup with handle and is digesting the week ending which jumped more than 5% in the second-best WEEKLY volume in the last 6 months. If the 21-day EMA at 135 holds here look for a possible move above the bull flag pivot of 140 which would carry a measured move to 158 into year-end.

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