Week 23 SPX Sectors plus other interesting ETFs Trending and Performance
Overall, the trending has improved, and more sectors seem to be participating in the bull market. At the same time the most promise is shown by the XLV and XLU which ae traditionally defensive in nature. The XLK and XLC both stalled a little in their runup and the S&P 500 is seeking new leaders. The question is whether the XLI and XLF can play that leadership role. We will have to see how the upcoming week shapes up before we can make any judgment.
The XLK, XLC, XLRE, XLB and XLE look like going lower. The XLY, XLV and XLU look like going higher.
I also looked at some other ETFs and my take is that precious metals (SLV, GLD and GDX) may be coming back up again. ETFs that look like moving lower are: SMH, ITB, KRE, XRT. ETFs that could be moving higher are: XBI.
Not financial advice.
Trending Heat Map
There is good improvement in the overall trending of the sectors with more sectors seeming to participate in the upward movement.
Perfectly Bullish (4): XLY, XLK, XLI, XLC
Short-term Bullish (4): XLRE, XLF, XLE, XLB
Short-term Bearish (3): XLV, XLU, XLP
Perfectly Bearish - 0
This is indicating that the broader market is aligning slowly with the bull market.
Performance
The June numbers demonstrate the rotation away from XLK and XLC onto the other sectors. Note that XLK and XLC are still positive for June but just fractionally so. So, the S&P 500 can keep going higher in this scenario where the lagging sectors try and catch up while the leading sectors take a little breather. We will review the charts later in this note to see the likelihood of that happening.
Week-over-Week Performance
The XLY is up 7 weeks in a row. The XLC is up 5 weeks in a row. The XLV is down 7 out of the last 8 weeks. (Note that I am showing only the last 6 weeks above).
Chart Observations
XLK: Price behavior is somewhat similar to the QQQ. The price is stretched far above the 150-day moving average. The MACD is also stretched where price tends to reverse and go down. So, the chances of price going lower are higher.
XLC: The MACD is indicating that price trend likely to reverse to the downside.
XLY: Price gapped up Friday and has created a small gap below. But price movement looks strong, and the upward move can continue.
XLI: Price has started trending better and looking to move up. The MACD histogram is at a 3-month high indicating somewhat overbought levels for now. I would wait before doing anything.
XLRE: Price has moved down 2 days after rising for the prior 9 days. The price came close to the 150-day moving average and turned down again. The MACD histogram also turned around on Friday. Price may be going lower from here in the immediate future.
XLF: Last week the price closed a gap above but then has struggled to get going beyond that. There is a bit of resistance just above price which it will need to overcome to move higher. There is also a recent gap below. The resistance level has held twice in the recent past and price has backed off from there. It really looks like toss up from here.
XLB: The price hit the 150-day and turned back around. The MACD seems to be indicating price is headed down.
XLV: Price may be finally moving up. The MACD turned around. In prior such moves the price has got close to the 150-day moving average and reversed. That sits at around 132.5 and price is at 130.4 possibly giving only a +1.5% upside. That can be +20% with options though.
XLU: Price has been rising and the MACD histogram has turned positive. There could be some more to this move up from current level of 66 to 68-69 level. That is about +3% gain.
XLE: Price sits at 81.3 and there is a descending trendline that cuts across around at 82.6. Looking at the MACD, the price movement and the 150-day moving average curve, to me it looks like price goes lower first.
XLP: Price has fallen and then has been basing and creating an opportunity for a reversal. That may be happening now. It does not look very promising though.
Other ETFs of Interest
SMH: Price still looks overbought and if I had to make a trade it would to the downside. The first stop I would consider to be the first gap below at 141.14 which is -3.89% below current level.
XBI: Price is trying to overcome resistance at the current levels. If price can close above 89, I will likely go long. The next resistance level is at around 95.
ITB: Price is at around a resistance level and looks to be headed lower.
KRE: Price has not been able to take out the resistance above at around the 45 level. Price has risen from a low of 36.08 up to 43.46 which is a rise of +20% in about 5 weeks. I would say price is more likely to drift down to around the 40 level before it starts to go up again. That is about -6% lower from current level.
XRT: Price bounced off support at around 57 and has climbed up to around 61 where it is hitting up against the 150-day moving average. The risk now seems to be to the downside.
KWEB: Price has moved up nicely from 24.95 on 5/31 to 27.90 now which is a gain of +11.82% in 7 trading days. I do not know where it goes from here and will stay away.
SLV: Price is rising again with the MACD line crossing over the signal line both of which are still negative though. The histogram has turned positive though. There is a gap above at 23.16 that price could close. That would be a +4% from current level. Seems like a good bet.
GLD: Similar to SLV, price seems to be turning around. The MACD is still not as developed as for SLV though.
GDX: The price movement and MACD is more developed for this one than for GLD. Overall, it does look like precious metals could be making a reversal to the upside.