8 of 11 S&P Sector ETFs Still have Overweight Ratings

Each of 11 S&P sectors has its own ETF: 2 are rated Underweight, 1 is rated Equal-Weight and 8 are rated Overweight.

Year-to-date leadership continues as a horse race between the consumer discretionary and the technology sectors and this week technology takes the lead by a head with a year-to-date gain of 14.4% versus 14% for discretionary, which now as an “inflating parabolic bubble” reading on its weekly chart. The REITs and utilities sectors set new 2018 high last week.

REITs, industrial, consumer discretionary, consumer staples, financial, utilities, healthcare and transportation are rated overweight. Technology is rated equal-weight. Materials and energy 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) – Overweight

The REITs ETF ended last week above its 200-week simple moving average of $91.79, and set its 2018 high of $97.08 on August 17. The weekly chart still shows REITs as positive but overbought.

Buy weakness to my monthly and quarterly value levels of $86.50 and $86.40, respectively, and reduce holdings on strength to my semiannual and annual risky levels of $102.40 and $113.66, respectively.

Materials Sector SPDR Fund (XLB) – Underweight

This ETF remains below my annual pivot of $59.99. My monthly risky level of $58.83 was tested as August began. The weekly chart has become negative.

Buy weakness to my semiannual value level of $54.12 and reduce holdings on strength to my annual and quarterly risky levels of $59.99 and $63.46, respectively.

Industrial Select Sector SPDR Fund (XLI) – Overweight

This ETF remains well below its annual risky level of $79.31. My semiannual pivot of $72.37 held on weakness three weeks ago. My monthly pivot is $76.26. The weekly chart is positive.

Buy weakness to my semiannual pivot of $72.37 and reduce holdings on strength to my annual and quarterly risky levels of $79.31 and $81.32, respectively.

Consumer Discretionary Select Sector SPDR Fund (XLY) – Overweight

This ETF remains above my annual pivot of $107.96 as a new all-time high of $114.07 was set on Aug. 9. The weekly chart is positive but overbought.

Buy weakness to my semiannual and annual pivots of $109.52 and $107.96, respectively, with my quarterly pivot of $110.31. Reduce holdings on strength to my monthly risky level of $115.16.

Consumer Staples Select Sector SPDR Fund (XLP) – Overweight

This ETF is now well above its 200-week simple moving average of $52.06 but is still well below my annual risky level of $63.34. The weekly chart is positive but overbought.

Buy weakness to my quarterly and monthly value levels of $51.74 and $50.51, respectively, and reduce holdings on strength to my semiannual and annual risky levels of $59.45 and $63.34, respectively.

Energy Select Sector SPDR Fund (XLE) – Underweight

This ETF is still above its 200-week simple moving average of $70.42 and is well below my annual risky level of $88.91. The weekly chart remains negative.

Buy weakness to the 200-week SMA as XLE is now below my quarterly pivot of $74.16 and reduce holdings on strength to my monthly and annual risky levels of $77.85 and $88.91, respectively.

Financial Select Sector SPDR Fund (XLF) – Overweight

This ETF closed last week above my semiannual pivot of $27.49 with my monthly pivot of $28.30 last week. The weekly chart is positive.

Buy weakness to my annual pivot of $26.77 and reduce holdings on strength to my quarterly risky level at $31.55. The June 2007 high is $30.83.

Utilities Select Sector SPDR Fund (XLU) – Overweight

This ETF tested my annual pivot of $54.46 on the new 2018 high of $54.75 set on Aug. 17. The weekly chart is positive but overbought.

Buy weakness to my quarterly and monthly value levels of $49.98 and $46.38, respectively, and reduce holdings on strength to this week’s risky level of $55.49. My semiannual and annual risky levels are $53.86 and $54.46, respectively.

Health Care Select Sector SPDR Fund (XLV) – Overweight

This ETF has moved above my annual pivot at $88.09 as the weekly chart becomes more overbought and reached the status of being an ‘inflating parabolic bubble’.

Buy weakness to my monthly and quarterly value levels of $85.93 and $85.48 and reduce holdings on strength to my semiannual risky level of $91.23 as my annual pivot remains at $88.09.

Technology Select Sector SPDR Fund (XLK) – Equal-Weight

The weekly chart is now neutral as the stochastic slipped below the oversold reading of 80.00. The ETF remains well above my annual value level at $60.55 with my monthly pivot at $72.31.

Buy weakness to my semiannual and annual value levels of $67.19 and $60.55, respectively, and reduce holdings on strength to my quarterly risky level of $74.76.

iShares Transportation Average ETF (IYT) – Overweight

This ETF remains well below its annual risky level of $204.61 with a new monthly pivot at $199.04 which remains a magnet. The weekly chart remains positive.

Buy weakness to my semiannual pivot at $181.19 and reduce holdings on strength to my annual and quarterly risky levels of $204.61 and $215.57, respectively.

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