by Steve Auger

Sector Analysis Summary

Transportation and Basic Materials remain in the dog house.  I'm tossing Industrials into the same category.  Health Care and Consumer Goods are given a yellow light status.  The remaining sectors have been given the green light for this week. 

ETF Trading System

Buy ETF (green light)

iShares DJ US Telecom

ETF Symbol: IYZ

Stock chart of iShares DJ US Telecom showing technical analysis for February 19, 2012 Last week I said "If there is significant penetration of the 200-day SMA with strong volume then it would be a good time to jump on board in spite of the cycles analysis."   DJ US Telecom broke through the 200 day moving average on Monday but was fairly lack-luster until Thursday when the ETF took off.  It is now trading near the top of the bullish channel and will probably cool off for a few days but should continue upwards longer term.  I'm giving this ETF a green light as it broke through a resistance level of $22 from late September.  A protective stop should be placed below the support level shown on the chart.


Buy ETF (green light)

iShares DJ US Technology

ETF Symbol: IYW

Stock chart of iShares DJ US Technology showing technical analysis for February 19, 2012 DJ US Technology continues to impress.  The ETF is still trading in a tight bullish channel.  It remains a green light.  The support level has been raised to $72.  A protective stop should be placed below this level.

 

Sell ETF (red light)

iShares DJ Transportation Average

ETF Symbol: IYT

iShares Dow Jones Transportation Average IYT stock chart showing technical analysis for February 19, 2012

DJ Transportation Average broke down the week before last and did not impress this last week.  Looking at the Williams%R indicator, it appears that the indicator could return below -80.  If it does so then the ETF will be in a downward trend.  This ETF continues to be given a red light.



Sell ETF (red light)

iShares DJ US Basic Materials

ETF Symbol: IYM

iShares DJ US Basic Materials stock chart showing technical analysis for February 19, 2012

Similar to IYT, DJ US Basic Materials broke down the week before last and did not impress this last week.    The price bounced off a long term support level but long term direction is unpredictable.  The ETF could very well retreat down to the support level or even penetrate it.  It is unlikely that the price will rise to the previous trend line so this ETF keeps its red light status.

 

Proceed with caution (yellow light)

iShares DJ US Consumer Goods

ETF Symbol: IYK

iShares Dow Jones US Consumer Goods stock chart showing technical analysis for February 19, 2012

DJ US Consumer Goods did well last week in spite of the "yellow light".  The ETF is due for a small pullback as it is at the top trend line of the wedge but the price shouldn't breach the support level identified on the chart.  This ETF continues to have a yellow light status due to the likelihood of a pullback and the On-Balance Volume which appears to be forming bearish divergence. 

 

Sell ETF (red light)

iShares DJ US Industrial

ETF Symbol: IYJ

iShares DJ US Industrial stock chart showing technical analysis for February 19, 2012

DJ US Industrial has been stopped in its tracks for two weeks, unable to penetrate $70.60 level.  Curiously it also hasn't dropped below $69.50 either.  In any case there is an ominous bearish divergence with the On-Balance Volume (OBV) developing and it is time to take profits on this ETF.  The status is now a red light.  BUT if the price pushes through the $70.60 level convincingly AND the OBV recovers then the ETF will become a buy again.  It is still (kind of) trading within the bullish channel.

 

 Proceed with caution (yellow light)iShares DJ US Healthcare

ETF Symbol: IYH

iShares DJ US Healthcare stock chart showing technical analysis for February 19, 2012

DJ US Healthcare is still in no man's land. Wait for a new pattern to form before entering a position.

 

Buy ETF (green light)

iShares DJ US Financial

ETF Symbol: IYF

iShares DJ US Financial Sector stock chart showing technical analysis for February 19, 2012

DJ US Financial is still trading above the channel center line.  This ETF remains a green light.  I don't see any major warning signals at present.



Buy ETF (green light)

iShares DJ US Energy

ETF Symbol: IYE

iShares DJ Energy stock chart showing technical analysis for February 19, 2012

DJ US Energy retraced but is still trading within an ascending wedge.  The price is at a cycle high but won't drop far.  So long as the ETF stays above the lower trend line of the wedge the ETF should be held long.



Buy ETF (green light)

 iShares DJ US Consumer Services

ETF Symbol: IYC

iShares DJ US Consumer Services stock chart showing technical analysis for February 19, 2012

DJ US Consumer Services is traveling a tight channel upward.  Note that the support level has been moved up so the protective stop should also be moved up.  All systems are go with this ETF.  The green light status is retained.
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Buy ETF (green light)

iShares DJ US Utilities

ETF Symbol: IDU

iShares DJ US Utilities stock chart showing technical analysis for February 19, 2012

DJ US Utilities is now given a green light.  This is based on the trend line that is emerging (see chart) and the OBV bullish divergence.  The chart is admittedly still a little sloppy but observe the resistance level on the chart.  Actually a support level right now as it just broke through this level late last week.  I'm expecting the price to improve from here.


Disclosure:  The author "Walks the walk" in addition to "Talking the Talk".

Posted
AuthorStockMarketStudent