According to AMZN represents 24.37% of XLY, so it stands to reason that whenever AMZN reverses and moves lower, we should also see a sustained move lower on XLY. I have been tracking XLY for clues to both AMZN and the NDX. Based on the weighting of AMZN it will have a big impact on both the NDX and XLY.

Looking at the advance of XLY from the 2016 lows, it counts well as a possible impulse wave (5 wave advance). However until we see a strong break back under 110.00, coupled with an impulsive decline we still don’t have any evidence to support a breakdown. It could still chop a little higher before wave 5 of [5] is completed. If the current wave count is close to completing an impulse wave from the 2016 lows, then a break lower on both AMZN and XLY is close at hand. If AMZN breaks down, it should also coincide with a move lower on NDX based on the weighting effect of AMZN to the NDX.

The recent gyrations of XLY are much cleaner than the recent gyrations of AMZN. Hence XLY could well be the key to AMZN.

Watch the 110.00 area a strong break of that area I favor sees a more sustained breakdown and likely sees AMZN and NDX move lower.