8 of 11 S&P Sector ETFs Have Overweight Ratings Following Two Downgrades

Richard1944

Year-to-date leadership has the consumer discretionary ETF in the lead up 18.5% year to date, but this ETF ended last week with a daily “key reversal’ day. The technology sector is second place up 16.7% year to date, but it lost ground versus the 17.2% year to date reported a week ago. Both remain in bull market territory 20.4% and 22.4% above their 2018 lows, respectively. The health care sector remains in an “inflating parabolic bubble” formation.

Materials, industrial, consumer discretionary, consumer staples, financial, healthcare, technology and transportation are rated overweight. RIETs, energy and utilities are rated equal-weight.

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

This ETF ended last week above its 200-week simple moving average of $92.00 and set its 2018 high of $98.11 on Sept. 21. The weekly chart has been downgraded to neutral as weekly stochastics decline below the overbought threshold of 80.00.

Buy weakness to my monthly and quarterly value levels of $88.53 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) – Overweight

This ETF moves above my annual pivot of $59.99. The weekly chart remains positive.

Buy weakness to my monthly and semiannual value levels of $57.48 and $54.12, respectively, and reduce holdings on strength to quarterly risky level of $63.46.

Industrial Select Sector SPDR Fund(XLI) – Overweight

This ETF moves above my annual pivot of $79.31. The weekly chart is positive but overbought.

Buy weakness to my monthly and semiannual value levels of $75.46 and $72.37, respectively, and reduce holdings on strength to my quarterly risky level of $81.32.

Consumer Discretionary Select Sector SPDR Fund(XLY) – Overweight

This ETF remains well above my annual pivot of $107.96 as a new all-time high of $118.08 was set on Sept. 21. The weekly chart is positive but overbought.

Buy weakness to my quarterly, semiannual and annual pivots of $110.31, $109.52 and $107.96, respectively, and reduce holdings on strength to my monthly risky level of $118.44.

Consumer Staples Select Sector SPDR Fund(XLP) – Overweight

This ETF remains above its 200-week simple moving average of $52.23 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 $49.03, 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) – Equal-Weight

This ETF remains well above its 200-week simple moving average of $70.10 and is well below my annual risky level of $88.91. The weekly chart has been upgraded to neutral as the weekly close is above its five-week modified moving average of $74.48.

Buy weakness to the 200-week SMA at $70.10 and reduce holdings on strength to my annual risky level of $88.91. My quarterly and monthly pivots are $74.16 and $74.58, respectively.

Financial Select Sector SPDR Fund(XLF) – Overweight

This ETF remains above my semiannual pivot of $27.49 as the weekly chart becomes positive but overbought.

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. In-between are semiannual and monthly pivots of $27.49 and $28.09, respectively,

Utilities Select Sector SPDR Fund(XLU) – Equal-Weight

This ETF tested my annual pivot of $54.46 again last week but the 2018 high of $54.94 set on Sept. 6 was not challenged. The weekly chart has been downgraded to neutral on the weekly close below its five-week modified moving average of $53.37.

Buy weakness to my monthly and quarterly levels of $50.62 and $49.98, respectively, and reduce holdings on strength to my annual risky level of $54.46 as my semiannual pivot remains at $53.86. My weekly risky level is $55.12.

Health Care Select Sector SPDR Fund(XLV) – Overweight

This ETF remains 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 $94.57 on Sept. 20.

Buy weakness to my monthly and quarterly value levels of $89.82 and $85.48, respectively, with my annual and semiannual pivots of $88.09 and $91.23, respectively, and reduce holdings on strength to this week’s risky level of $96.08.

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 semiannual and annual value levels of $67.19 and $60.55, respectively, and reduce holdings on strength to my quarterly and monthly risky levels of $74.76 and $75.83, respectively. The ETF tested this sell zone again last week. My weekly risky level is $75.03.

iShares Transportation Average ETF (IYT) – Overweight

This ETF stayed above 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 $196.57 and $181.19, respectively, and reduce holdings on strength to my quarterly risky level at $215.57. My annual pivot remains at $204.61.



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