SPDR Sector Review/Preview October 23, 2010

I found it much more interesting to look at the Select Sector SPDR’s on a weekly time-frame than on a daily this weekend.  In reviewing them I noticed that  they fit into three buckets based on the strength of their charts. I categorize those buckets from strongest to weakest as: Running Higher, Moving Up to Resistance and In a Range. This week I also see a relative ranking of all nine sectors. Lets walk through them.

(As always you can see these individual charts and more on my twitter feed and on chartly.)

Running Higher

1. Consumer Staples Select Sector SPDR, XLP

Consumer Staples have clearly broken higher and are running up still. The Relative Strength Index (RSI) is just getting overbought and the moving Average Convergence Divergence (MACD) indicator is increasing. This is the strongest sector.
2. Utilities Select Sector SPDR, XLU

Utilities have the next best chart on a weekly basis. They have broken the 200 week Simple Moving Average (SMA) with rising RSI and positive MACD.

Whoa, Staples and Utilities leading the charge. That does not sound good.

Moving Up to Resistance

3. Technology Select Sector SPDR, XLK


The up and comers start with the Technology sector. That is a bit more comforting. This sector is close to being n the first category and will move there if the near dragonfly doji this week continues higher next week.


4. Industrials Select Sector SPDR, XLI

The Industrial sector is next, but seems to be leveling just below resistance of 33.


5. Consumer Discretionary Select Sector SPDR, XLY


The Consumer Discretionary sector follows nearing resistance at the April highs.

6. Health Care Select Sector SPDR, XLV


The Health Care sector follows but printed a doji signifying indecision this week. Through 32 it will break a triple top.


7. Energy Select Sector SPDR, XLE

The final sector in this group is Energy. It is above the 200 week SMA and headed to resistance at 61.55.

Technology, Industrial, Consumer Discretionary , Health Care and Energy sectors as the up and comers is a bit more promising about the market’s view on the economy.

In a Range

8. Materials Select Sector SPDR, XLB


Materials seem to be pulling back from a triple top. They have support at 32.30, not too far below. Should they rebound and break resistance it would be a good sign for the market view of the economy.


9. Financials Select Sector SPDR, XLF

The consistent laggard has been the Financial sector. How long does a range have to persist for it to be called something else? It is a horrible omen for the economy in general that the Financial sector is bringing up the rear.

So even though the market looks to be heading higher.  the leaders are Consumer Staples and Utilities, followed by the Technology, Industrial, Health Care, Consumer Discretionary, and Energy Sectors. It is not a strong sign for the economy that Staples, Utilities and Health Care are leaders. These are typically defensive sectors. When you see a rotation out of these and into into the Technology, Discretionary and Financial sectors you will know that the economy is finally turning around and following the stock market higher.

Trade’m well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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