I always say when earnings start to come out higher and higher, expectations for even better reports set in…
But it also means prices move up, too.
As a direct result of positive earnings, the Consumer Discretionary Select Sector SPDR Fund (NYSEArca: XLY), an ETF that tracks consumer discretionary stocks in the S&P 500, has jumped above my “buy zone” (or the $187 level) and its 200-day moving average.
That’s a great sign for us, but does it mean we’re out of the so-called “danger zone”?
I’ve been talking about this for a few days now and because we’re finally there, I thought it’d be beneficial for me to give you some more sector analysis for February 2022.
Sector Analysis for February 2022: What to Expect as More Companies Report Earnings
The fact that the XLY is trading above its 200-day MA is a positive sign telling us the market is more likely to go higher than lower.
If fact, take a look at this chart of the Dow:
You’ll notice that the Dow is hovering around the $350 level, and looks like it’s about to break through and head higher.
I’m going to keep my fingers crossed and hope I don’t jinx us…
But the fact that the XLY, which is one of the weaker sectors right now, is also already breaking through is a positive sign.
This Friday, we have another consumer sentiment report. If that number is solid, we should see a continuation of this rally (Thursday’s sell-off aside).
In other words, there’s a good chance for the Dow to move substantially higher.
Check out my short sector analysis for February 2022 video below to learn more about where the Dow is headed, along with the VanEck Semiconductor ETF (Nasdaq: SMH) and Technology Select Sector SPDR Fund (NYSEArca: XLK).
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