Consumer Staples and Utilities S&P Sector ETFs have been Upgraded

9 of 11 S&P sector ETFs have underweight ratings as materials set new 2018 low.

The dynamics of the 11 S&P sector ETFs is starting to show the characteristics of a flight to safety. Stocks in the consumer staples ETF represents companies that sell products everyone needs and uses in their daily lives. Investors buy the utilities ETF for its dividend yield of 3.32%.

Today, 9 sectors are rated underweight, one is rated equal-weight and one is weighted overweight,

My Warning Continues:Reduce holdings in the stock market by at least 50%.

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 $325 billion down the drain. The unwinding of the balance sheet has thus been the “canary in the coal” and the smell of the popping stock bubbles intensified in the first three days of October when the Fed drained $18 billion. So many stocks, sectors and indices were in “inflating parabolic bubble” formations and the popping sounds have been loud and clear.

Over the last two weeks the Federal Reserve refrained from reducing the balance sheet and it still stands at $4.175 trillion. The Fed is expected to drain $50 billion in October and the first $18 billion was a problem as the month began, beware that there’s $32 billion more over the next eight business days.

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 remains well below its 200-week simple moving average of $92.00 after setting its 2018 high of $98.11 on Sept. 21. The weekly chart remains negative with the ETF below its five-week modified moving average at $92.34. My quarterly value level is $87.39 with my monthly risky level at $92.28.

Materials Sector SPDR Fund(XLB) – Underweight

This ETF is declining towards its 200-week simple moving average at $51.41. The weekly chart remains negative with the ETF below its five-week modified moving average of $56.84. XLB is below my semiannual and monthly pivots at $54.12 and $53.63, respectively, with my annual and quarterly risky levels at $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 $76.27. My semiannual and monthly value levels are $72.37 and $71.39, respectively, 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 $112.00. XLY is below my monthly, semiannual and annual pivots at $111.47, $109.52 and $107.96, respectively, with my monthly risky level of $118.36.

Consumer Staples Select Sector SPDR Fund(XLP) – Equal-Weight

This ETF held its 200-week simple moving average of $52.33 again last week. The weekly chart remains has been upgraded to neutral with the ETF above its five-week modified moving average of $53.83. My monthly value level is $47.27 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 $74.13 but above its 200-week simple moving average of $70.01. XLE is below my quarterly and monthly pivots at $72.88 and $72.47, respectively, with my annual risky level of $88.91. 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 fire week modified moving average of $27.52. My annual pivot and monthly value level of $26.77 and $25.62, respectively, with my semiannual pivot at $27.49 and my quarterly risky level at $32.86. The June 2007 high is $30.83.

Utilities Select Sector SPDR Fund(XLU) – Overweight

This ETF has a weekly chart that’s been upgraded to positive with the ETF above its five-week modified moving average of $53.50. The 200-week simple moving average is $49.04. XLU is above my monthly, semiannual, quarterly and annual pivots at $52.44, $53.86, $54.42 and $54.46, respectively.

Health Care Select Sector SPDR Fund(XLV) – Underweight

This ETF has a weekly chart that’s been downgraded to negative with the ETF below its five-week modified moving average of $92.18. My annual and quarterly value levels are $88.09 and $86.50, respectively, with my semiannual and monthly risky levels at $92.80 and $91.23, respectively.

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 $72.69. My semiannual and annual value levels are $67.19 and $60.55, respectively, with my monthly pivot at $72.79 and my quarterly risky level of $77.77.

iShares Transportation Average ETF (IYT) – Underweight

This ETF has a negative weekly chart with the ETF below its five-week modified moving average of $197.67. My semiannual value level is $181.19 with my monthly pivot at $192.24, my annual pivot of $204.61 and my quarterly risky level at $221.72.

Comments

Stories