Sector Analysis 25 March 2012
/by Steve Auger
Sector Analysis Summary
Most of the sector ETFs traded sideways last week. The energy ETF (IYE) dropped fairly significantly (against my green light) and my protective stop was triggered. I am giving the remaining sectors (other than energy) the same Red / Yellow / Green status as last week.
iShares DJ US Telecom
ETF Symbol: IYZ
DJ US Telecom dropped in price last week but is trading in the middle of an ascending wedge. IYZ will likely retreat to the lower trend line on the chart $22.30. Longer term this ETF will probably follow the general market. An Ascending Wedge can be very bearish if the price falls below the lower line. I suggest sitting on the sidelines until a clearer pattern is established.
iShares DJ US Technology
ETF Symbol: IYW
DJ US Technology traded sideways last week. I expect the price will reach the ascending channel lower trend line in the near future, approximately $76. IYW will be a good buying opportunity at that level with protective stop near the support level shown on the chart.
iShares DJ Transportation Average
ETF Symbol: IYT
DJ Transportation Average retreated last week and although IYT is at a local support level I have to keep the red light signal on given the On-Balance Volume divergence and likely continuation downward of the Williams%R.
iShares DJ US Basic Materials
ETF Symbol: IYM
DJ US Basic Materials dropped last week but is still trading within a Descending Channel. I'm getting mixed signals here as the OBV is showing bullish divergence but Williams%R didn't make it to the -20 level before starting to drop. Given that the pivot points are showing lower highs and lower lows, I still believe that IYM is still bearish. If the ETF does break out from here then it will experience resistance levels at $73 and $74.
iShares DJ US Consumer Goods
ETF Symbol: IYK
DJ US Consumer Goods traded sideways last week but is still trading within an ascending channel. The status of this ETF remains green light with a protective stop below the support level shown on the chart.
iShares DJ US Industrial
ETF Symbol: IYJ
DJ US Industrial fell back last week and came close to touching the lower trend line of the Ascending Channel. IYJ is sitting a a support level. Wait for a bullish move on strong volume before entering a long position. The OBV is still showing strong negative divergence.
iShares DJ US Healthcare
ETF Symbol: IYH
DJ US Healthcare pulled back to a support level last week and appears to be initiating a move up, following the trend line shown on the chart.
iShares DJ US Financial
ETF Symbol: IYF
DJ US Financial traded sideways last week. Wait until IYF retreats to the trend line shown on the chart before entering a position. The On Balance Volume is still exhibiting bearish divergence. OBV should be watched carefully.
iShares DJ US Energy
ETF Symbol: IYE
DJ US Energy fell out of the ascending triangle from last week and triggered my stop loss (so I no longer hold a position). IYE has now formed a descending triangle with lower highs and lower lows. I suggest staying on the sidelines here as the next move is difficult to call.
iShares DJ US Consumer Services
ETF Symbol: IYC
DJ US Consumer Services, like IYK Consumer Goods, managed to stay within its ascending channel and support level. The status of this ETF remains green light with a protective stop below the lower trend line.
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iShares DJ US Utilities
ETF Symbol: IDU
DJ US Utilities has formed an ascending triangle. Agressive traders could go long here but the OBV bearish divergence suggests it is better for conservative traders to stay on the sidelines.
Disclosure: The author "Walks the walk" in addition to "Talking the Talk".
