Two Leaders Rolling Over on Daily RRG

Julius de Kempenaer, the investor of Relative Rotation Graphs, has pointed out an interesting developments on the Daily and Weekly RRGs. I, for one, am a huge fan of RRGs and they're something I monitor on a constant basis.

In regards to the shorter-term Daily RRG, Julius points out to two Sectors which have been leaders, Technology and Industrials, are beginning to rollover and are heading towards the "Weakening" (Yellow) quadrant. 

So why should this cause us to ponder the strength of Technology (XLK) over the coming days. As always, we want to revert to the actual price charts. On an absolute basis, Technology is coming in to a couple big resistance zones...And on a relative basis, it's relationship against the S&P 500 has also begun to stall out in between support and resistance...Combining these three developments, Julius points out that "Given the steep rise in the price chart, one could argue that some sort of pause would be in order."

And where do we stand on the Weekly RRG?Here, Technology is still in the "Improving" (Blue) quadrant. But according to Julius, "The question is if that move will be strong enough to actually rotate into the leading quadrant. With the tail of XLK on the daily RRG already rolling over downward that is a difficult call."

Moving on to Industrials, we are also seeing this Sector coming into a big resistance zone on an absolute basis:And we are also seeing the same thing on a relative basis to the S&P 500, similar to Technology:I think Julius sums up these scenario pretty nicely, stating that "With XLK reaching resistance between $70-$71, the RS-Line hovering sideways in a resistance area, and RS-Ratio at high historical values I prefer to remain cautious for the time being." He goes on to further state that, "On the price chart, XLI is inside a resistance zone between $75-$76 after a super-steep rally out of the $60-low in December. Relative strength broke its (one-year-old) falling resistance but is now approaching a horizontal resistance barrier while the Jdk RS-Ratio line is at its highest level since November 2016." I tend to agree with Julius in his sentiment that even if we have seen the lows in these two Sectors (back in December), it's hard to enter here due to the Risk/Reward being unfavorable.