The Silver Cross Index measures the number of stocks that have a 20-day EMA above the 50-day EMA, or are on a “Silver Cross” IT Trend Model BUY Signal. This gives us a more complete picture than simply measuring the number of stocks above their key moving averages.
Yesterday, on Consumer Discretionary (XLY), the Silver Cross Index moved above its signal line. This gives us a new IT BULLISH Bias on the sector. This is a sector to watch. With the release of a positive retail sales report, this sector is likely to see even more upside.
Price has broken above both the 20/50-day EMAs. Participation is shooting up and, given the percentage of stocks above their 50-day EMA is higher than the Silver Cross Index, it should continue to rise higher. It is coming out of oversold territory. Stochastics are rising, and relative strength is turning up. There is plenty of room for more upside.
Conclusion: The Consumer Discretionary (XLY) sector is showing signs of renewal and, based on recent retail sales data, it should continue to see more upside. This sector is likely to continue to lead the market higher now that we have a BULLISH IT Bias in the S&P 500 and now a BULLISH Bias in the intermediate term for XLY.
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