Clarity Tonight:

Another of the mega caps REPORTS earnings after the bell and this will have a big effect on the XLY. AMZN is the largest holding in the XLY at almost one-quarter of the fund, will release numbers, and on the MONTHLY chart below look at how this chart is setting up. Of course, Tuesday ended April and the MONTHLY candlestick was a spinning top which often indicates fatigue, but the reaction on Wednesday will tell the real story. This could be on the verge of a massive cup-base breakout with a measured move of 100 handles. This will take time if it even happens at all, but this could be a good start for the XLY as we mentioned yesterday on the backs of a possible TSLA turnaround. At some point, we will need help from the other 60% of the XLY (AMZN and TSLA make up nearly 40%) and this may not come from the third largest component in HD which is now bear flagging along the 200-day SMA. One feather in the bear’s cap on the XLY MONTHLY chart is the March doji candle.

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