The technology, industrial and materials companies are among cyclical sectors that typically strengthen in a rising rate environment as investors turn away from safer assets and shift into riskier areas of the market. However, those sectors, particularly industrials and materials, have lagged this year as the Fed has yet to raise rates. That could be a sign though that as rate hike speculation rises again, DIA could be primed for some upside as investors embrace cyclical sectors.
“The Dow closed last week at its 61% Fibonacci retracement level and at the same time it is kissing the underside of a 3-year old resistance at,” adds Kimble. “In my humble opinion, a key test of dual support-term resistance is in play today and it would not be that great of a place, for the Dow to run out of gas.”
Dow Jones Industrial Average
Chart Courtesy: Kimble Charting Solutions