Technical analysis: US Sector Spotlight September 20, 2021 263

  • Retail sales jumped in August with households confidently brushing off concerns of the resurgence of Covid-19.
  • Core Consumer price index rose 0.1% MoM, missing analyst expectations.
  • Despite the correction in the broader market, shipping, consumer and utilities are likely to stage a comeback based on the technicals.

Technical analysis

The shipping-based ETF has experienced strong growth since the start of last year and even more when the Suez Canal blockage occurred in March 2021. Based on the technicals, the ascending triangle offers a strong possible breakout to the upside. Should it fail to break, support zone 1 at US$27.00-US27.68 offers a possible rebound to the upside.

The utilities are likely to find a rebound at US$62.86-US$63.70. First, Utilities counters and consumer staples counters usually correct far more than the broader market when selling occurs, but they are the first to rebound before the broader market recovers. Hence, we spotted some symmetrical likeness in corrective channel A during last December and corrective channel B in May 2021. We believe that in 2 months, prices will likely rebound at the said immediate support zone at US$62.86-US$63.70.

 

The double top formation has been confirmed and similar to the utilities ETF (US: XLU), selling has been strong last week. Hence, there are two likely support levels we are looking at: US$70.00 psychological support and the major support zone at US$67.54-US$68.18.

 

The likelihood of a rebound is higher over at US$67.54-US$68.18. The reason being that price action and structure resembles the move back in September 2020 – December 2020. Furthermore, the upside wasn’t impressive after breaking a new high in Mid-March this year.

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About the author

Profile photo of Chua Wei Ren

Chua Wei Ren
Technical Analyst
Phillip Securities Research Pte Ltd

Wei Ren specialises in Technical Analysis and has 11 years of experience in studying classic technical price action. He also study and research extensively on Elliott wave theory, Dow Theory. He believes that history plays an important role in how the market is reflected in the future.

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