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The 11 S&P sector ETFs are lead by the Technology Select Sector SPDR ETF (XLK), which has gained 5.8% year-to-date, followed by the Consumer Discretionary Select Sector ETF (XLY) with a gain of 4.4%. The S&P 500 is up just 0.7% year-to-date.
The tech sector is lead by Apple (AAPL) and Microsoft (MSFT), while the discretionary sector is lead by Amazon.com. If these stocks stop setting new highs, the stock market is vulnerable as 7 of 11 sector ETFs are down year-to-date.
The Financial Select Sector SPDR (XLF) has gained 1.9% year-to-date on the hype of higher interest rates. Don’t buy into this notion as many banks stretched for yields and face mark-to-market losses. The banking system has been increasing exposures to nonfarm nonresidential real estate loans, and face the risk of defaults as retail stores and malls are shuddered. This exposure is up 43.6% since the end of 2007 to a whopping $1.39 trillion according to data from the Federal Deposit Insurance Corporation.
The SPDR Dow Jones REIT ETF (RWR) reflects this risk as this sector is in correction territory, down 10.8% since its Jan. 2 high.
The Health Care Select Sector SPDR ETF (XLV) is up 1.1% year-to-date, but keep in mind all the uncertainties as providing health care services at a reasonable cost remains an issue.
The Energy Select Sector SPDR ETF (XLE) should be a bright spot as our country becomes an energy exporter. Not so when this ETF is in correction territory, down 14.6% since setting its high on Jan.24.
The technical warning flags are flying as only the tech sector has a positive weekly chart. All other sectors have negative weekly chart with REITs and the Utilities Select Sector SPDR ETF (XLU) oversold.
The S&P 500 is divided into 11 sectors and each sector can be traded using its own exchange-traded fund.
Here’s The Scorecard For The 11 Sector ETFs
SPDR Dow Jones REIT ETF (RWR) – Underweight
Buy weakness to this week’s value level of $81.12. Reduce holdings on strength to my monthly risky level of $88.22.
Materials Sector SPDR Fund (XLB) – Underweight
Buy weakness to my semiannual value level of $56.21. My annual pivot is $59.99 remains a magnet. Reduce holdings on strength to my quarterly pivot and monthly risky level of $61.62 and $63.48, respectively.
Industrial Select Sector SPDR Fund (XLI) – Underweight
Buy weakness to my semiannual value level of $71.16. My quarterly pivot is $77.57. Reduce holdings on strength to my monthly and annual risky levels of $79.11 and $79.31, respectively.
Consumer Discretionary Select Sector SPDR Fund (XLY) – Underweight
Buy weakness to my semiannual and quarterly value levels of $97.61 and $95.98, respectively. My monthly pivot is $104.68. Reduce holdings on strength to my annual risky level of $107.96.
Consumer Staples Select Sector SPDR Fund (XLP) – Underweight
Buy weakness to the 200-week simple moving average at $51.22 and rising each week. Reduce holdings on strength to my monthly, quarterly, semiannual and annual risky levels of $54.99, $58.49, $60.75 and $63.34, respectively.
Energy Select Sector SPDR Fund (XLE) – Underweight
Buy weakness to my semiannual value level of $59.88 and reduce holdings on strength to my monthly, quarterly and annual risky levels of $71.90, $78.32 and $88.91, respectively.
Financial Select Sector SPDR Fund (XLF) - Underweight
Buy weakness to my quarterly, annual and semiannual value levels of $27.20, $26.77 and $26.69, and reduce holdings on strength to my monthly risky level of $29.81 and its June 2007 high of $30.83.
Utilities Select Sector SPDR Fund (XLU) - Underweight
Buy weakness to my weekly value level of $47.74, and reduce holdings on strength to my monthly, annual, semiannual and quarterly risky levels of $53.55, $54.46, $58.60 and $59.24, respectively.
Health Care Select Sector SPDR Fund (XLV) – Underweight
Buy weakness to my quarterly value level of $79.35 and reduce holdings on strength to my monthly, annual, semiannual pivots are $86.66, $88.09 and $91.42, respectively.
Technology Select Sector SPDR Fund (XLK) – Overweight
Buy weakness to my quarterly, semiannual and annual value levels of $63.59, $61.66 and $60.55, respectively, and reduce holdings on strength to my monthly risky level of $72.08.
iShares Transportation Average ETF (IYT) – Underweight
Buy weakness to the 200-week simple moving average of $155.68 and rising each week. My semiannual pivot is $188.79. Reduce holdings on strength to my monthly, quarterly and annual risky levels of $191.65, $194.69 and $204.61, respectively.
