5% Bounce Incoming: XLC

As you might know, I love my divergences. I think it is one of the easiest ways to spot reversals without lag (i.e. Basically every other indicator will tell you to get in after the reversal occurs. A divergence will get you in before it happens). The only caveat is sometimes it takes multiple drops before the reversal occurs. This means that divergences are great dollar cost averaging tools.

XLC looks to be in a potential reversal situation. I am seeing a bullish divergence along with the low/crossing stochastic. I think that it will push it up about 5% before we see a continued bearish divergence on top. I would consider this a short term opportunity.

Again, I would suggest using dollar cost averaging when conducting a trade like this one. It is possible for the price to drop lower and the bullish divergence to continue.