Sector Analysis 26 November 2012

by Steve Auger

The markets experienced a major bounce on a short trading week. Most of the price charts look quite bearish but I do not recommend shorting everything as this strategy could be quite dangerous at this time of year. So I am going to take a wait-and-see attitude. Aggressive traders could initiate shorts at the first signs of downward movement. The rest of us should stay on the sidelines this week, except for Basic Materials.

The following is this week's ETF sector analysis of the DJ symbols IYZ, IYW, IYT, IYM, IYK, IYJ, IYH, IYF, IYE, IYC and IDU.

iShares DJ US Telecom

ETF Symbol: IYZ

The short position in DJ US Telecom was stopped out last week. It looks like the ETF will start falling again but it is best to stay on the sidelines given the time of year. Look for a new downward move before reestablishing a new short position.

iShares DJ US Technology

ETF Symbol: IYW

DJ US Technology - same commentary as US Telecom (IYZ).

iShares DJ Transportation Average

ETF Symbol: IYT

DJ Transportation Average bounced off the support level last week but there is still no clear signal. Remain on the sidelines.

iShares DJ US Basic Materials

ETF Symbol: IYM

DJ US Basic Materials had a strong week but is now at the 200 day Simple Moving Average and the upper trend line of a descending channel. Enter a short position with a protective stop at $67.75.