Consumer Staple Fund – XLP – Update

The 10/11/20 post “Clearest Elliott Wave Road Map” examined the Consumer Staple- Exchange Traded Fund (XLP) as a guide for timing the broader US stock market.  XLP continues to have a clear Elliott Wave count.  The decline since the November peak has been slow and shallow, which is the signature of a corrective pattern in an ongoing bull move.

This drop is probably Intermediate wave (4).  Wave four declines can find Fibonacci support at two retrace levels: retracement of the third wave, and retracement of the prior three waves. The daily XLP chart courtesy of Trading View illustrates the two potential support zones.

The main Fibonacci coordinate – a .236 retrace of the movement up from the 03/23/20 bottom comes at XLP 63.34.  The secondary Fibonacci coordinate – a .382 retrace of the movement up from the 05/14/20 bottom comes at 63.53.

When two or more Fibonacci coordinates are  close it usually represents powerful support/resistance.

Also note the daily Stochastic has reached the oversold zone and the daily RSI is close to being oversold.  The decline could terminate soon assuming a bottom is not already in place. If a bottom holds the next move up could at least reach the area of the November 2020 high.

The Dow Jones Transportation Average also has a clear Elliott Wave pattern.  An update on this index will be issued in a future post.

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: