XLY Consumer Discretionary Weekly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Price Extended

Consumer discretionary stocks have seen their day in the sun. The XLY ETF is a moon shot off the March low and obviously that is due to Scamazon (online shopping) its largest holding. AMZN, HD, MCD, NKE, LOW, SBUX, TGT, BKNG, TJX and DG are the top holdings in XLY. Home Depot and Lowe's have been hot as people stuck at home make repairs and finally paint those yellow, cigarette-stained walls. If the XLY is topping-out on the weekly basis, that means the top holdings are as well, or at least most of them.

The XLY has overbot RSI and stochastics agreeable to a pullback. The red rising wedge pattern is ominous since the collapses from that apex can be quite quick and dramatic. The red liens show universal neggie d across all indicators sans the MACD which is trying to sneak higher by a hair. The other indicators want a smackdown now on the weekly basis but the MACD is trying to hold the door open to price coming back up after only a week or two stutter-step and then placing the top a couple weeks out. At any rate, XLY should begin trailing lower for multiple weeks. If you enjoyed the party on the long side, call a cab and get out of there before the fights begin and the cops arrive.

The Aroon is at maximum uber euphoric bullishness; it is impossible to get more bullish. The green bull line is pegged at 1 hundo and the red bear line is in the cellar at zero. Both will move to the center eventually creating a negative cross. Price has violate the upper band so the middle band at 139 and lower band at 121, both rising, are on the table.

On the XLY monthly chart, it is cooked except for the MACD line still sloping higher. Thus, the negative divergence on the monthly and the neggie d on the weekly will spank price lower for several weeks but XLY should come up again a month or two out. Perhaps there is a big stock market pullback but then the dip-buyer's rush into AMZN and other high-flyer's again driving price up for one last time in the monthly time frame. So the jury is out on the monthly. Let the several weeks of downside play out and see where the charts are at. Like the stock market as a whole, there is a major top occurring now that will last months if not years. XLY will top out last since it has the high-flyers but most indexes and sectors should be cooked between now and January and after that sadness for bulls follows for a long time.

Keystone does not hold XLY long or short. Let's look at the daily and see what is going on. It tops out with negative divergence clear as a bell. It appears the downside has started and is in progress. That little hair of a high in the MACD on the weekly chart above may not matter and on the first print this morning it may be neggie d and cooked (so the top in XLY on the daily and weekly basis is now). The daily is likely targeting the 147-149 area as support then 140-142. Shorting the rallies in XLY going forward is a prudent idea.

Interestingly, it goes against what 99% of Wall Street which is telling you to buy, buy, buy! Strategas Analyst Chris Verrone appears on Bloomberg minutes ago telling clients to buy consumer discretionary stocks with both hands. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.