Energy Select Sector SPDR Fund (XLE) – XLE briefly violated its 2012 uptrend line before bounces back. It would take a weekly close below this line to suggest a sustainable change in trend was taking place. Despite the 9.5% May-June 2013 decline, XLE still maintains rising 10/30-week moving averages. However, the 6/20/13 downside gap needs to be close above 80.69 in order to show investors that some of the damage was being repaired.
Consumer Staples Select Sector SPDR Fund (XLP) – XLP has bounced off of support in the upper-30s, which corresponds to the June 2013 low and the 150-day / 30-week moving averages. However, in the process of the May-Jun 2013 decline, there has been technical damage, such as the 5/31/13 negative outside week pattern, the rolling over of the 50-day / 10-week moving averages and a series of lower low/highs. This warrants a cautious outlook.
Industrial Select Sector SPDR Fund (XLI) – The bullish call is based upon two large symmetrical triangle breakouts earlier this year and an intermediate to longer-term trend that remains favorable. The bearish camp could be looking to the 6/21/13 negative outside week and a potential head and shoulders top as early warning signals. I prefer to follow the dominant trend, but will be ready to switch gears on a confirmed violation of neckline support near 40.
Materials Select Sector SPDR Fund (XLB) – In hindsight a 5/24/13 negative outside week pattern might form a head of a potential head and shoulders top patter that looks to be developing. A 6/20/13 downside gap and another negative outside week during 6/21/13 are alluding to a test of neckline support near 37.10. The ability to maintain support could be help form the right shoulder. From a relative strength perspective, XLB continues to breakdown last week.
Utilities Select Sector SPDR Fund (XLU) – As various other sector ETFs look to be in the midst of some kind of distribution patterns. XLU has already broken down from one in May 2013. It now appears that a healthy bottoming process is underway, although some more work needs to be done. For example, a move above the June 2013 high (38.45) snaps a string of lower highs on the daily chart and strengthens its June 2013 low as initial support.
iShares Dow Jones US Telecom Index (IYZ) – IYZ has closed its 6/20/13 downside gap, which helps to stabilize the selling pressure. However, what appears to be the thorn in its side is overhead supply near 27.50-27.60 or the June 2008 reaction high and the recent May 2013 high. From a relative strength perspective, IYZ is still in the process of recoverying from its April-June 2013 underperformance. A move above its April 2013 downtrend line helps this process.
J. Beck Investments is an independent provider of technical research for ETFs.