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TPA Analytics: Trade Setup – Long XLP & Short XLY

By Jeffrey Marcus | May 19, 2020

TPA sees an opportunity to go long XLP (Consumer Staples) and short XLY (Consumer Discretionary).

  • PAIR: XLP/XLY
  • Buy: XLP (Consumer Staples)
  • Sell: XLY (Consumer Discretionary) TARGET +20% STOP -6%

The Top 10 sectors and holding of each ETF is shown in the tables below. TPA has two active BUY recommendations on AMZN, which is 25% of the XLY. It is also most of the reason for it outperforming XLP recently.

Still, given the incredible and historic weakness in Retail sales and Employment, there is a technical vulnerability of many of the top holdings in XLY. TPA sees the positive action of AMZN eventually being overwhelmed by XLY’s other constituents.

With 70% of the U.S. economy directly driven by the consumer, and another 20% is indirectly affected, the end-user eventually drives business to business decisions.

TPA’s explains its reasoning in the charts that follow. The focus is on the ratio of XLP/XLY or the relative performance of XLP versus XLY.

Long XLP Short XLY, TPA Analytics: Trade Setup – Long XLP & Short XLY

Long XLP Short XLY, TPA Analytics: Trade Setup – Long XLP & Short XLY


Long XLP Short XLY, TPA Analytics: Trade Setup – Long XLP & Short XLY

Long XLP Short XLY, TPA Analytics: Trade Setup – Long XLP & Short XLY

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Jeff Marcus founded Turning Point Analytics (TPA) in 2009 after 25 years on trading desks and 13 years as a head trader to provide strategic and technical research to institutional clients. Turning Point Analytics (TPA) provides a unique strategy that works as an overlay to clients’ good fundamental analysis. After 10 years of serving only large institutions, TPA now offers its research services to mid and small managers, RIA’s, and wealthy sophisticated individuals looking for a way to increase their returns and outperform their peers.

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2020/05/19
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