Today’s chart of the day is from Investors Intelligence technical analyst Tarquin Coe, who looks at the relative performance of the telecommunications sector as measured by iShares U.S. Telecom ETF (IYZ).
From an Investors Intelligence note:
“Telecom stocks have outperformed over recent sessions as the general market gets frothy, possibly the early sign of a defensive rotation. Rotations can last a number of weeks, so it does not call for immediate hatch-battening, but it is something to heed.
The ratio chart of the iShares U.S. Telecom (IYZ) against the SPDR S&P 500 ETF (SPY) showed sharp outperformance by the industry going into the September 2012 market high.
Recent movement on the chart shows a sharp rally from support off the July 2012 low, accompanied by a bullish momentum divergence on the MACD [moving average convergence divergence]. Those two observations together suggest the rotation has further to run.”
Full disclosure: Tom Lydon’s clients own SPY.
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