Now that it has been more than two months since I posted the chart below, I thought now might be a good time to update the three sectors I have been watching most closely since the March bottom. These sectors are the financials (NYSEARCA:XLF), homebuilders (NYSEARCA:XHB), and consumer discretionary (NYSEARCA:XLY) stocks. As the chart shows, the financials and homebuilders recently moved above their 50 day simple moving average, only to fall sharply below that important technical level over the course of the past three days.
Until the XLF, XHB, and XLY can all close above their 50 day simple moving averages, I am likely to be skeptical of anything that has the appearance of a rally.
Click to enlarge