US sectors have experienced some notable weakness this week as many groups fail to hold their recent breakouts.
While this does a paint a picture that the market environment is transitioning to a choppier period, it is important to view this within the context of the longer-term trends.
Let's take Consumer Discretionary $XLY as an example.
The ETF has just broken to new lows, and the short-term trend has shifted lower.
But when we zoom out, the ETF is actually sitting on top of a significant breakout level. Typically, retests such as these are often met with strong demand.
It's unsurprising to see this weakness early in the year considering the last two years of significant market gains. The third year of bull markets can be more choppy than the preceding two, but longer-term the trends are constructive.
Perhaps the most surprising element of this recent weakness is crypto. While stocks have sold off modestly, crypto is enduring quite a beating. Our Senior Crypto Analyst, Louis Sykes, will be joining Director of Research, Steve Strazza, in an emergency crypto update at midday today.
To tune in, click here to see how they're taking advantage of this sell off in crypto.
