Holding Back the Tide of Higher Rates

[Trading With Larry Benedict]( Holding Back the Tide of Higher Rates By Larry Benedict, editor, Trading With Larry Benedict The Fed’s 0.75% rate rise last month marked the fifth rate rise in 2022. It also puts the Fed Fund’s rate a full 300-basis points (or 3%) higher than at the start of the year and its highest level since January 2008. Given its sensitivity to interest rates, this rate rise cycle has been devastating for the consumer discretionary sector. From its January high to its June low, the Consumer Discretionary Select Sector ETF (XLY) dropped a whopping 37%. But, when we [last looked at XLY]( it had rallied strongly off those lows. Then, after a pullback, was showing promising signs that the rally was regathering steam. However, with that rally petering out and XLY rolling over… today I’m going to discuss what I see coming next… Recommended Link [‘SELL THIS DOOMED FAANG STOCK IMMEDIATELY']( [image]( Wall Street titan Marc Chaikin and world-renowned forensic accountant Joel Litman just delivered an urgent crisis warning... and shared their No. 1 step to take with your money right now to protect yourself. Plus, Marc reveals his #1 stock you should SELL immediately. It's a legendary FAANG stock that he says is headed for disaster. [Click here for details before tomorrow's opening bell.]( -- A Tell-Tale Bearish Signal On the chart, XLY’s downtrend began when the 50-day moving average (MA – blue line) started to track down at the start of the year. Apart from a brief period in March and April, the 10-day MA (red line) bearishly tracked below the 50-day MA until July… Consumer Discretionary Select Sector ETF (XLY) [Image] Source: eSignal The other tell-tale bearish sign is the action of the Relative Strength Index (RSI)… Apart from that period in March-April when XLY made a lower high, the RSI remained predominantly in the lower half of its range (below the green line) throughout the entire move down. But, as the RSI gradually began to grind higher in June and July, XLY was able to find support (orange line). Then, as the RSI broke into the upper half of its range, XLY rallied higher. [New Battery up to 94% Cheaper Than a Tesla Battery]( However, after the RSI topped out in overbought territory (upper grey dashed line) and then reversed, XLY rolled over and headed down. When we looked at XLY on September 7 (red arrow), the RSI had bearishly broken back into the lower half of its range. And that’s where it has remained since then, apart from a brief period in early September. Adding to the bearish sentiment, after tracking closely together, the 10-day MA has recently broken strongly beneath the 50-day MA. The real question now is – with the RSI tracking near oversold territory (lower grey dashed line) and XLY closing in on support (red circle) – what can we expect from here? Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Holding Support Is Crucial Let’s take another look at the chart… Consumer Discretionary Select Sector ETF (XLY) [Image] Source: eSignal The more a level is tested and holds, the stronger that level becomes. And the bigger deal it is when that level is broken. That’s why I’ll be watching the action around the orange support line like a hawk over the coming week… Despite testing it around a dozen times from May through July, ultimately this price level held. And it provided the base from which XLY began rallying from July through August. If the RSI forms a decisive “V,” and XLY holds support, then that could provide the setup for a potential long trade. However, don’t forget that when support is broken, that same price level can often turn into resistance (and vice versa). Meaning, if XLY once again tests this level and instead crashes through, then that could set XLY up for another major leg down. Regards, Larry Benedict Editor, Trading With Larry Benedict Reader Mailbag In today’s mailbag, a One Ticker Trader member shares his experience… I bought two contracts of your recent Quad Witching trade for $1,587. I thought we were holding until expiration and evidently missed the close trade notification, so I held until Friday. I guess dumb luck is better than no luck. I closed the trade at $20,752 for a $19,164 gain. What can I say, but thank you, sir. Even as I apologize for not following your directions properly. – James B. Thank you as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@opportunistictrader.com. IN CASE YOU MISSED IT… Market Wizard Reveals: [The One Ticker Retirement Plan]( Introducing the “One Ticker Retirement Plan”… It’s a way to trade just one ticker… And potentially make all the money you need – no matter what happens in the stock market. Sounds too good to be true? [Larry reveals everything in this interview – including the name of the ticker you need to get started.]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. [The Ultimate Guide to Taking Back Your Privacy]( [The Trader’s Guide to Technical Analysis]( [The 101 Guide to Pre-IPO Investing]( [The Opportunistic Trader]( The Opportunistic Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.opportunistictrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. The Opportunistic Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-888-208-6550, Mon–Fri, 9am–5pm ET, or email us [here](mailto:feedback@opportunistictrader.com). © 2022 Omnia Research, LLC. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Omnia Research, LLC. [Privacy Policy]( | [Terms of Use](