10 Of 11 S&P Sector ETFs Have Underweight Ratings

The consumer staples ETF has a positive weekly chart and thus has an overweight rating.

The consumer staples sector is rated overweight. The materials, industrial, energy, financial and transports sectors are in correction territory. The utilities sector has an underweight rating but has a dividend yield of 3.41%. Four of the eight “Dogs of the Dow” for 2018 have yields above 4.00% as an alternative.

My Warning Continues: Reduce holdings in the stock market by at least 50%. Whenever there’s a rally use that strength to reduce holdings.

I have been warning about a stock market reversal since the Federal Reserve began to unwind its $4.5 trillion balance sheet. Since October 1, 2017, the Fed has flushed $360 billion down the drain. October began the period whereby the Fed is scheduled to reduce the balance sheet by a staggering $50 billion a month. U.S. Treasury yields rose dramatically, and stocks crashed after a reduction of $18 billion for the period ending Oct. 3. Over the next two weeks the Fed drained just another $2 billion. During the week of Oct. 25 through Oct. 31 the Fed upped the ante to another $33 billion bringing the total for October to $53 billion. This was a factor for higher U.S. Treasury yields late last week and for Friday’s slump in the stock market. The balance sheet now totals $4.140 trillion.

Establishing weightings based up their weekly charts is the backbone of an Asset Allocation Model.

· An Underweight Sector Has A Negative Weekly Chart. A negative weekly chart shows the ETF below its five-week modified moving average with declining or oversold weekly momentum (12x3x3 weekly slow stochastic).

· An Equal-Weight Sector Has A Neutral Weekly Chart. A neutral weekly chart shows the ETF below its five-week modified moving average with rising weekly momentum, or above its five-week modified moving average with declining weekly momentum.

· An Overweight Sector Has A Positive Weekly Chart. A positive weekly chart shows the ETF above its five-week modified moving average with rising or overbought weekly momentum.

SPDR Dow Jones REIT ETF (RWR) – Underweight

This ETF tested its 200-week simple moving average of $91.98 at last week’s high. The weekly chart remains negative with the ETF below its five-week modified moving average at $91.48. My quarterly value level is $87.39 with my monthly risky level at $99.93.

Materials Sector SPDR Fund(XLB) – Underweight

This ETF ended last week above below its 200-week simple moving average at $51.44 after setting a new 2018 low of $50.09 on Oct. 25. The weekly chart remains negative with the ETF below its five-week modified moving average of $55.31. My semiannual pivot at $54.12 was tested last week. My annual and quarterly risky levels are $59.99 and $64.28, respectively.

Industrial Select Sector SPDR Fund(XLI) – Underweight

This ETF has a negative weekly chart with the ETF below its five-week modified moving average of $74.07. The ETF set a fresh 2018 low of $66.99 on Oct. 29. The ETF is below my semiannual pivot of $72.37 with my annual and quarterly risky levels at $79.31 and $84.90, respectively.

Consumer Discretionary Select Sector SPDR Fund(XLY) – Underweight

This ETF has a negative weekly chart with the ETF below its five-week modified moving average of $109.82. XLY is below my semiannual pivot of $109.52 with my annual pivot at $107.96 and my monthly risky level of $112.87.

Consumer Staples Select Sector SPDR Fund(XLP) – Overweight

This ETF has a positive weekly chart with the ETF above its five-week modified moving average of $54.09. This ETF held its 200-week simple moving average of $52.39 during the week of Oct. 12. My monthly value level is $52.27 with my quarterly pivot of $54.37 and my semiannual and annual risky levels of $59.45 and $63.34, respectively.

Energy Select Sector SPDR Fund(XLE) – Underweight

This ETF has a negative weekly chart with the ETF below its five-week modified moving average of $71.59 and is below its 200-week simple moving average of $69.89. XLE is below my quarterly pivot at $72.88 with monthly and annual risky levels of $78.77 and $88.91, respectively. My quarterly value level lags at $43.74.

Financial Select Sector SPDR Fund(XLF) – Underweight

This ETF has a negative weekly chart with the ETF below its five-week modified moving average of $26.93. This ETF is below my annual pivot at $26.77 which was tested at last week’s high. My semiannual pivot is $27.49 and my quarterly risky level at $32.86. The June 2007 high is $30.83. This ETF set a fresh 2018 low of $25.03 on Oct. 26.

Utilities Select Sector SPDR Fund(XLU) – Underweight

This ETF has a negative weekly chart with the ETF below its five-week modified moving average of $53.41. The 200-week simple moving average is $49.09. XLU is below my semiannual, quarterly and annual pivots at $53.86, $54.42 and $54.46, respectively, with my monthly risky level at $55.68.

Health Care Select Sector SPDR Fund(XLV) – Underweight

This ETF has a weekly chart is negative with the ETF below its five-week modified moving average of $90.83. My annual and quarterly pivots are $88.09 and $86.50, respectively, with my semiannual and monthly risky levels at $92.80 and $91.23, respectively. My monthly pivot is $90.04.

Technology Select Sector SPDR Fund(XLK) – Underweight

This ETF has a negative weekly chart with the ETF below its five-week modified moving average of $71.16. My annual value level is $60.55 with a semiannual pivot at $67.19 and my monthly and quarterly risky levels of $71.99 and $77.77, respectively.

iShares Transportation Average ETF (IYT) – Underweight

This ETF has a negative weekly chart with the ETF below its five-week modified moving average of $192.47. My semiannual pivot is $181.19 with my annual risky level of $204.61. This ETF set a fresh 2018 low of $175.50 on Oct. 29.

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