Sector Rotation Before CPI (SPY, QQQ)

Clear sector rotation has been observed a day before CPI data release on Tuesday morning. It seems traders are getting out of Technology ( XLK ) stocks and defensive sectors like Utilities ( XLU ), Basic Materials ( XLB ) as well as Industrials ( XLI ) have been climbing up.


The chart depicts S&P 500 ETF ( SPY ) along with a ranking of all the major sectors at the bottom of the chart in an hourly setup. During the final hours of the last trading day (Monday) there has been a sharp sell-off of tech stocks as the industrials and basic materials have climbed up in strength.

A slow decline in Health Care ( XLV ) and gradual rise in Financials ( XLF ) over last few days have also been observed.

Please note that the first CPI of the year (January) usually creates volatility in the market. Which has also been observed in above 3% rise in the Volatility Index ( VIX / UVXY ) looking into the CPI release.


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