Chartsmarter Insights

No "DASH" For Trash: Looking over the components in the XLY, some have really struggled. The third largest holding behind the juggernauts of TSLA and AMZN, Home Depot over the last one month period has recorded back to back advances once on 5/29-30, and is in "bear market" mode 20% off its most recent 52 week highs. Since 3/7 it has swam below the 200 day SMA and we know nothing good happens beneath that secular line. ORLY, another top 10 holding has formed a bearish descending triangle not long after a 15:1 split, and it is not uncommon for stocks to struggle after undergoing one. As the selection committee for the XLY, one of the best moves they could have made was adding the daily chart below of DASH. A leader in every sense of the word, it is up 31% YTD and up nearly a double over the last one year period. On its MONTHLY chart in June it is peaking its head above a 215.35 cup with handle pivot, but must CLOSE above their on Monday June 30th to be considered legitimate. Notice how it seemed allergic to the 220 area as it was above the number for 3 months between September and November 2021, but all CLOSED well below it with finishes of 205.98, 194.80, and 178.77. How it ends June could be very telling. 

Healthcare Inflection Point:  Within the 11 major S&P sectors on a YTD basis, there is some interesting bifurcation. Atop the leaderboard sits the industrials and in the cellar is consumer discretionary. Notice healthcare is one of only two groups in the red off almost 3% so far in 2025. Below is the MONTHLY chart of the XLV and this is finding too much comfort along its upward sloping 50 MONTH SMA. Perhaps it is gathering some stamina for a "healthy" run, pun intended, but if June or July can not push off it, I think some trouble could lie ahead. The WEEKLY chart shows a bearish engulfing candle heading into Wednesday, down 2%, and as ugly as some of these WEEKLY losses have looked the ETF fights back the very next week. The last 4 WEEKLY losses that all CLOSED hard upon their lows the weeks ending 4/4, 4/18, 5/9, and 5/23 (boxed), never saw any follow-through lower with the next week advancing. A potential double bottom, with a 149.84 trigger, is forming if the XLV can right the ship and remain north of the 200 WEEK SMA. The MONTHLY XBI chart still has my attention as the last time it traded toward the 70 number it bounced hard reaching 93.48, 174.45, 95.02, and 103.37 in 2019, 2021, 2022, and 2024. A break ABOVE the bearish head and shoulders pattern would be very bullish. 

Industrial Allure:   The industrial space has been on a roll in 2025 as it is the best performing of the major 11 S&P sectors YTD with a gain of more than 9%. It has been buoyed by defense, waste management, heavy construction, and of course defense. Let us dive into some influential players within. Top ten XLI holding ETN displayed some brute strength Monday getting the week off to a good start breaking above a bull flag. The WEEKLY chart is taking out a cup with handle and notice volume tailed off within the handle suggesting sellers were reluctant to part with their positions. Other top ten component GEV is consolidating a very powerful move here as it sets up its own bull flag and a move above the very round 500 number could see a break toward 700, and a breakout would negate a couple of doji candles from 6/3 and 6/13. DE which has been steadily outperforming peer CAT is eyeing a bull flag trigger of 526 which could see a measured move to 616. If the overall bull flag mention sounds redundant it is a good sign that stocks are digesting big moves and looking for another continuation move higher. For those looking for international exposure, remember that from the start of 2025, ERJ may be starting to get the upper hand on rival BA as it breaks above a ratio chart downtrend. This could see a possible move to 61 from Monday's bull flag breakout above the very round 50 number.

Pharma Rolling:   Is the recent outperformance in the PPH over the XBI signifying "risk off" in the healthcare arena or is there room for both to behave well? I think the latter even though the daily chart below comparing the two shows pharma pulling away against biotech. My belief is that the XBI will grind higher into the very round par number into the latter part of the second half and I keep coming back to the MONTHLY chart here which shows the break ABOVE the bearish head and shoulders formation in December 2023 and we know from FALSE moves come fast ones in the opposite direction. It moved quickly to the very round par number which it could not jump above throughout most of 2024. Notice it backed off toward the 70 area with a huge bullish hammer candle in April, where it found a bounce four previous times in 2018, 2020, 2022, and 2023. The ratio chart does indicate it has done nothing against the more mature IBB for 3 years following the 2021 downtrend. One name in particular I am paying attention to is INCY as it gets comfortable above the 200-day SMA after not being deterred by the upside gap fill from the 3/14 session (and acting well POST breakout above bullish inverse head and shoulders breakout). Enter with a buy stop above a 71.07 cup with handle trigger.