Only 2 of 11 S&P Sector ETFs Have Overweight Ratings

The REITs and consumer staples are the only two of 11 S&P sector ETFs that carry overweight ratings.

REITs and consumer staples sectors are rated overweight. Materials, consumer discretionary, financial, utilities and healthcare are rated equal-weight. Industrial, energy, technology and transports are rated underweight.

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. As of Nov. 7, the balance sheet was $4.142 trillion. Remember that another $50 billion is the scheduled reduction in November.

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) – Overweight

This ETF is now above its 200-week simple moving average of $91.95. The weekly chart is now positive with the ETF above its five-week modified moving average at $92.38. My quarterly value level is $87.39 with my monthly risky level at $99.93.

Materials Sector SPDR Fund(XLB) – Equal-Weight

This ETF is well above its 200-week simple moving average at $51.51 after setting a new 2018 low of $50.09 on Oct. 25. The weekly chart remains negative with the ETF below its five-week MMA of $55.12. My semiannual pivot at $54.12 was tested again 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 MMA of $73.14. 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) – Equal-Weight

This ETF has a neutral weekly chart with the ETF below its five-week MMA of $109.59. 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 MMA of $55.10. This ETF held its 200-week SMA 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 MMA of $70.37 and is below its 200-week SMA of $69.81. 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) – Equal-Weight

This ETF has a neutral weekly chart with the ETF below its five-week MMA of $26.92. This ETF is on my annual pivot at $26.77. 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) – Equal-Weight

This ETF has a neutral weekly chart with the ETF above its five-week MMA of $54.00. The 200-week SMA is $49.16. XLU is above 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) – Equal-Weight

This ETF has a neutral weekly chart with the ETF above its five-week MMA of $91.44. 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 MMA of $70.21. 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 MMA at $191.06. My semiannual pivot is $181.19 with my monthly and annual risky levels at $196.89 and $204.61, respectively. This ETF set a fresh 2018 low of $175.50 on Oct. 29.

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