What’s a Dead-Cat Bounce Look Like?

Xle_10705

See for yourself.  As always, we are not predicting the future, only pointing out current conditions….  but this is not a healthy looking rally attempt…  could short on next reversal signal, especially if it comes with a test of the 50-day EMA.  A failed test of the 50-day could lead to a test of the 200-day, which would be the next place to take profits, around $45 on the XLE (see chart). Same principle for most any other chart of a stock from one of the former leadership groups, such as housing, mortgage, certain retailers, or energy.  Cheers!

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