8 of 11 S&P Sector ETFs have Overweight Ratings

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

Year-to-date leadership continues to be horse race between the consumer discretionary and the technology sectors and this week it’s a tie with year-to-date gains of 14.2%. The REITs, consumer discretionary and utilities sectors set new 2018 high last week.

REITs, industrial, consumer discretionary, consumer staples, financial, utilities, healthcare and transportation are rated overweight. Materials and technology are rated equal-weight. Energy is 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 $91.72 and set its 2018 intraday high of $95.85 on August 6. 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) – Equal-Weight

This ETF remains below my annual pivot of $59.99. My monthly risky level of $58.83 was tested as August began.

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.

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.

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 $52.00 but is still well below my annual risky level of $63.34.

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 above its 200-week simple moving average of $70.47 and is well below my annual risky level of $88.91.

Buy weakness to my quarterly value level 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, and tested my monthly pivot of $28.30 last week.

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 remains below my annual risky level of $54.46. XLU set a new 2018 high of $53.66 on Aug. 10.

Buy weakness to my quarterly and monthly value levels of $49.98 and $46.38, respectively, and reduce holdings on strength to my semiannual and annual risky levels of $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.

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

The weekly chart remains overbought with the ETF well above my annual value level at $60.55 with a new monthly pivot at $72.31. Weekly stochastics have slipped below the overbought threshold of 80.00.

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 was a magnet last week.

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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