Energy Select Sector SPDR Fund (XLE) – XLE still appears to be a technical leadership sector from an intermediate-longer-term basis. However, from a relative strength perspective, XLE has floundered somewhat lately, which is the reason for the Neutral tactical outlook. The price chart has not changed much as XLE continues to bounce around initial support near 79-80, or the Mar 2013 high, the May 2013 breakout level and the 50-day /10-week moving averages.
Consumer Staples Select Sector SPDR Fund (XLP) – Although it may be a bit too early to call, but XLP is trying to find a firm footing at the bottom of a larges relative strength ascending triangle pattern. Aggressive accounts will need to monitor the bottom of this patter closely for signs of stability. The price chart still has some damage that needs to be repaired as a result of the large 5/31/13 negative outside week and the violation of the Jan 2013 uptrend line. [Consumer Staples ETF: Playing Defense with Sectors]
Industrial Select Sector SPDR Fund (XLI) – Relatively speaking, XLI could be on the verge of a technical breakout, at least from a near-term perspective. It would take a convincing move through the 2011 downtrend line to substantiate a longer-term reallocation. The price chart on the other hand needs to be monitored as there is still a potential head and shoulders top forming. Neckline is near 40 and above 44.70 could negate the pattern.
Materials Select Sector SPDR Fund (XLB) – In terms of relative strength, XLB is still recovering from the April 2013 breakdown. It will likely take a move above its breakdown level to assure investors that the underperformance is stabilizing. The absolute chart is getting a bit interesting as a potential complex head and shoulders top may be forming. Manage risk appropriately. Initial support remains at the May 2013 low (38.67), while neckline support may be closer to 37.10.
Utilities Select Sector SPDR Fund (XLU) – XLU met its April-May 2013 head and shoulders top projection and looks to be turning around. This does not mean the start of a major rally, but likely a trading range between the June 2013 low (37.20) and its breakdown level (39.50). The relative strength chart has also shown improvements as the May 2013 downtrend has been broken. These improvements warrant a Neutral weighting.
iShares Dow Jones US Telecom Index (IYZ) – Positive days on 6/7 and 6/13 2013The 5/22/13 negative outside day and the subsequent 5/24/13 negative outside week made timely calls to the weakness that followed. The question now however is whether or not the May-Jun 2013 7% decline is through. Recent positive outside day patterns and a turn in relative strength suggest buyers might be returning, at least from a near-term perspective.
J. Beck Investments is an independent provider of technical research for ETFs.