Join the Rally With These 11 Sector ETFs

Richard Suttmeier

NEW YORK (TheStreet) -- Today I am crunching the numbers for 11 sector-based electronically traded funds. So far in 2014, the leader is Health Care Sector SPDR Fund , up 7.5% YTD, followed by Utilities Sector SPDR Fund up 5%, and in third place Materials Sector SPDR Fund , up 3.9%. Only two are slightly lower year-to-date. Note that seven of 11 ETFs set new all-time or multiyear highs on Thursday, March 6.

There is a technical red flag for the health care ETF, as it set an all-time intraday high at $60.49 on Thursday and closed the day below Wednesday's low at $59.88. By definition, a key reversal will be confirmed by lower closes today and on Monday.

Looking at today's "Crunching the Numbers" table on page 3 of this article, all 11 sector ETFs have rising or overbought 12x3x3 weekly slow stochastics.

But a close today above all of the five-week modified moving averages shown in the table keeps all weekly chart profiles technically positive. The only exception is that the utilities ETF is below its 21-day simple moving average at $39.92.


On to the ETFs:

Materials Sector SPDR ETF ($48.00, up 3.9% YTD) set a new all-time intraday high at $48.26 on Thursday, March 6. The weekly chart stays positive on a close today above its five-week MMA at $46.10. My quarterly value level is $46.18, with a semiannual pivot at $47.54 and monthly risky level at $49.54.

Industrial Sector SPDR Fund ($52.83, up 1.1% YTD) set a new all-time intraday high at $52.95 on Thursday. The weekly chart stays positive on a close today above its five-week MMA at $51.46. My quarterly and semiannual value levels are $51.33 and $50.88, with a monthly risky level at $55.39.

Consumer Discretionary SPDR Fund ($67.49, up 1% YTD) set a new all-time intraday high at $67.63 on Thursday. The weekly chart stays positive on a close today above its five-week MMA at $65.61. My semiannual value levels are $65.13 and $63.58, with quarterly and monthly risky levels at $69.16 and $70.29.

Consumer Staples SPDR Fund ($42.54, down 1% YTD) set its all-time intraday high at $43.46 on Nov. 18, then traded as low as $39.83 on Feb. 3 -- well below its 200-day SMA. This ETF rebounded back above its 200-day SMA at $41.39 on Feb. 13. The weekly chart stays positive on a close today above its five-week MMA at $42.00. My annual value level is $40.69 (tested at the low), with semiannual and monthly risky levels at $43.27 and $43.56.

iShares U.S. Consumer Services ($124.55, up 2.7% YTD) set a new all-time intraday high at $124.84 on Thursday. The weekly chart stays positive on a close today above its five-week MMA at $120.64. My semiannual value level is $117.62, with quarterly and monthly risky levels at $126.02 and $128.90.

Energy Sector SPDR Fund ($87.85, down 0.7% YTD) set a multiyear intraday high at $88.53 on Dec. 31, then declined to its 2014 low at $81.78 on Feb. 3. That was a temporary move below its 200-day SMA, now at $84.06. The weekly chart stays positive on a close today above its five-week MMA at $86.03. My quarterly value level is $86.54 with semiannual and annual risky levels at $88.66 and $89.37.

Finance Sector SPDR Fund ($22.27, up 1.9% YTD) set a new all-time intraday high at $22.32 on Thursday, March 6. The weekly chart stays positive on a close today above its five-week MMA at $21.65. Semiannual value levels are $20.24 and $19.44, with a monthly pivot at $21.36 and quarterly risky level at $23.38.

Health care ETF ($59.60, up 7.5% YTD) set a new all-time intraday high at $60.49 on Thursday. The weekly chart stays positive but overbought on a close today above its five-week MMA at $57.74. My quarterly value level is $56.59, with a monthly pivot at $58.09.

Utilities ETF ($39.87, up 5% YTD) set its 2014 intraday high at $40.93 on Feb. 24, between semiannual and annual risky levels at $40.46 and $41.19. The weekly chart stays positive on a close today above its five-week MMA at $39.46. Annual and semiannual value levels are $39.12 and $38.88.

Technology Sector SPDR Fund ($36.53, up 2.2% YTD) set a new multiyear intraday high at $36.60 on Thursday. The weekly chart stays positive but overbought on a close today above its five-week MMA at $35.74. Semiannual and annual value levels are $34.04 and 32.26, with a semiannual pivot at $35.92, and monthly and quarterly risky levels at $36.88 and $37.42.

iShares Dow Transportation ($135.69, up 2.9% YTD) is challenging its all-time intraday high at $135.93, set on Jan. 23. The weekly chart stays positive on a close today above its five-week MMA at $131.58. Semiannual and quarterly value levels are $129.17 and $126.32, with a semiannual pivot at $131.89 and monthly risky level at $136.65.


To summarize: the health care ETF is the most important to track into today's close. A close today above the March 5 low at $59.88 negates Thursday's key reversal day. A close today below last week's low at $58.92 would also be a weekly key reversal. This would clearly set up a watch for next week's closes for all 11 ETFs versus their five-week MMAs.

See my chart on the following page for more data on these stocks.

Crunching the Numbers with Richard Suttmeier


There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.

Interpretations: (stocks below a moving average listed in red are below that moving average)

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (Even Apple declined to its 200-week SMA in June 2013.)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (Even Apple tested or crossed its 200-day SMA in nine of the last 10 years.)

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.


Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

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