It has been a while since I talked about analyzing the 8 Sectors. This is an interesting way to compare one sector with the combined 8 sectors. In the 10 minute chart above, the indicator at the bottom is a stochastic of the 8 Sectors (Green/Red line) and one sector for comparison, which in this case is the Financial Sector (XLF, Cyan line). For the 10 minute chart, the stochastic is for 39 periods or 6.5 hours.
The Financial Sector being slightly stronger or weaker than the broad market is not a signal of market direction in itself, but a divergence between the two deserves attention. First notice that both the broad market and the Financial Sector were improving as the Futures was testing lows late Friday afternoon.
On the 5 minute chart above during the same time period as mentioned above, notice that the Financial Sector was improving faster than the 8 Sectors combined. The Financials were dragging the broader market up.
The $TICK was also significantly improving as the market was testing lows.
This is the code of the stochastic used for the Sector Analysis.
Charles
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