S&P Sector ETFs; 6 are Overweight, 2 are Equal-Weight, 3 are Underweight

The 11 S&P sectors are led by consumer discretionary, technology and health care.

Year-to-date leadership has the consumer discretionary ETF in the lead up 18.8% year to date. The technology sector is second place up 17.8% year to date. Health care is in third place up 15.1% year to date. All three are in bull market territory 20.7%, 23.6% and 20.8% above their 2018 lows, respectively. The health care sector remains in an “inflating parabolic bubble” formation. The REITs sector dipped to a test of its “reversion to the mean”.

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

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 ended last week holding its 200-week simple moving average of $92.02 and set its 2018 high of $98.11 on Sept. 21. The weekly chart has been downgraded to negative with the ETF below its five-week modified moving average. Buy weakness to my quarterly value level of $87.39 and reduce holdings on strength to my semiannual and annual risky levels of $102.40 and $113.66, respectively. My monthly pivot is $92.28.

Materials Sector SPDR Fund(XLB) – Equal-Weight

This ETF moves back below my annual pivot of $59.99. The weekly chart shifts to neutral. Buy weakness to my semiannual and monthly value levels of $54.12 and $53.63, respectively, and reduce holdings on strength to quarterly risky level of $64.28.

Industrial Select Sector SPDR Fund(XLI) – Overweight

This ETF moves back below my annual pivot of $79.31. The weekly chart remains positive but overbought. Buy weakness to my semiannual and monthly value levels of $72.37 and $71.39, respectively, and reduce holdings on strength to my quarterly risky level of $84.90.

Consumer Discretionary Select Sector SPDR Fund(XLY) – Overweight

This ETF remains well above my annual pivot of $107.96 with the all-time high of $118.08 set on Sept. 21. The weekly chart remains positive but overbought. Buy weakness to my monthly, semiannual and annual value levels of $111.47, $109.52 and $107.96, respectively, and reduce holdings on strength to my monthly risky level of $118.36.

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

This ETF remains above its 200-week simple moving average of $52.25 but is still well below my annual risky level of $63.34. The weekly chart has been downgraded to neutral. Buy weakness to my monthly value level of $47.27 and reduce holdings on strength to my semiannual and annual risky levels of $59.45 and $63.34, respectively. My quarterly pivot is $54.37.

Energy Select Sector SPDR Fund(XLE) – Overweight

This ETF remains well above its 200-week simple moving average of $70.08 and well below my annual risky level of $88.91. The weekly chart has been upgraded to positive with Friday’s close above its five-week modified moving average of $74.73. Buy weakness to my quarterly and monthly value levels of $72.88 and $72.47, respectively, and reduce holdings on strength to my annual risky level of $88.91.

Financial Select Sector SPDR Fund(XLF) – Underweight

This ETF remains above my semiannual pivot of $27.49 but the weekly chart has been downgraded to negative. Buy weakness to my annual pivot and monthly value level of $26.77 and $25.62, respectively, and reduce holdings on strength to my quarterly risky level at $32.86. The June 2007 high is $30.83. My semiannual pivot is $27.49.

Utilities Select Sector SPDR Fund(XLU) – Underweight

This ETF stayed below my annual pivot of $54.46 last week. The weekly chart has been downgraded to negative on the weekly close below its five-week modified moving average of $53.22. Buy weakness to the 200-week simple moving average of $48.96 and reduce holdings on strength to my quarterly and annual risky levels of $54.42 and $54.46, respectively, as my semiannual pivot remains at $53.86.

Health Care Select Sector SPDR Fund(XLV) – Overweight

This ETF remains well above my annual pivot at $88.09 as the weekly chart becomes more overbought and continues to be an “inflating parabolic bubble”. XLV set its all-time intraday high of $95.21 on Sept. 28. Buy weakness to my quarterly, semiannual, monthly, annual and quarterly value levels of $92.80, $91.23, $88.09 and $86.50, respectively, and reduce holdings on strength to this week’s risky level of $95.98.

Technology Select Sector SPDR Fund(XLK) – Overweight

The weekly chart remains positive but overbought with the ETF well above my annual value level at $60.55 and XLK set its all-time intraday high of $76.03 on Aug. 30. Buy weakness to my monthly, semiannual and annual value levels of $72.79, $67.19 and $60.55, respectively, and reduce holdings on strength to my quarterly risky level of $77.77.

iShares Transportation Average ETF (IYT) – Overweight

This ETF is just below my annual pivot of $204.61 last week as its weekly chart remains positive but overbought. Buy weakness to my monthly and semiannual value levels of $192.24 and $181.19, respectively, and reduce holdings on strength to my quarterly risky level at $221.72. My annual pivot remains at $204.61.

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