The Technology Sector Leads, But Suffered A ‘Key Reversal’

Technology and Utilities are the only sector ETFs with positive weekly charts as dividend yields become important again.

It’s tough to be bullish on stocks when only two have positive weekly charts. The fact that technology suffered a daily ‘key reversal’ and with utilities going positive is a warning that investors are shifting from momentum stocks to dividend stocks.

The ‘key reversal’ for the tech sector ETF occurred on March 13 as XLK set an all-time intraday high of $71.34 then closed below the March 12 low of $70.53.

The S&P 500 is divided into 11 sectors and each sector can be traded using its own exchange-traded fund.

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) – Equal-Weight

Buy weakness to this week’s value level of $83.82. Reduce holdings on strength to my monthly risky level of $88.22.

Materials Sector SPDR Fund (XLB) – Underweight

Buy weakness to my semiannual value level of $56.21. My annual pivot is $59.99 remains a magnet. Reduce holdings on strength to my quarterly pivot and monthly risky level of $61.62 and $63.48, respectively.

Industrial Select Sector SPDR Fund (XLI) – Underweight

Buy weakness to my semiannual value level of $71.16. My quarterly pivot is $77.57. Reduce holdings on strength to my monthly and annual risky levels of $79.11 and $79.31, respectively.

Consumer Discretionary Select Sector SPDR Fund (XLY) – Equal-Weight

Buy weakness to my semiannual and quarterly value levels of $97.61 and $95.98, respectively. My monthly pivot is $104.68. Reduce holdings on strength to my annual risky level of $107.96.

Consumer Staples Select Sector SPDR Fund (XLP) – Underweight

Buy weakness to the 200-week simple moving average at $51.31 and rising each week. Reduce holdings on strength to my monthly, quarterly, semiannual and annual risky levels of $54.99, $58.49, $60.75 and $63.34, respectively.

Energy Select Sector SPDR Fund (XLE) – Underweight

Buy weakness to my semiannual value level of $59.88 and reduce holdings on strength to my monthly, quarterly and annual risky levels of $71.90, $78.32 and $88.91, respectively.

Financial Select Sector SPDR Fund (XLF) – Equal-Weight

Buy weakness to my quarterly, annual and semiannual value levels of $27.20, $26.77 and $26.69, and reduce holdings on strength to my monthly risky level of $29.81 and its June 2007 high of $30.83.

Utilities Select Sector SPDR Fund (XLU) - Overweight

Buy weakness to my weekly value level of $48.52, and reduce holdings on strength to my monthly, annual, semiannual and quarterly risky levels of $53.55, $54.46, $58.60 and $59.24, respectively.

Health Care Select Sector SPDR Fund (XLV) – Equal-Weight

Buy weakness to my quarterly value level of $79.35 and reduce holdings on strength to my monthly, annual, semiannual pivots are $86.66, $88.09 and $91.42, respectively.

Technology Select Sector SPDR Fund (XLK) – Overweight

Buy weakness to my quarterly, semiannual and annual value levels of $63.59, $61.66 and $60.55, respectively, and reduce holdings on strength to my monthly risky level of $72.08.

iShares Transportation Average ETF (IYT) – Equal-Weight

Buy weakness to the 200-week simple moving average of $156.2 and rising each week. My semiannual pivot is $188.79. Reduce holdings on strength to my quarterly and annual risky levels of $194.69 and $204.61, respectively.

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