by Steve Auger
Sector Analysis Summary
Last week started out bullish as I expected but stalled mid-week. Many of the sectors still appear to be in breakout mode but not quite as appetizing as they appeared last week. I'm anticipating a short term pullback in the general markets but after that the stock markets should start to move up again.
iShares DJ US Telecom
ETF Symbol: IYZ
DJ US Telecom chart has a tug of war going on. On the bullish side, there is an ascending triangle forming with the most recent day's action seeing the candlestick shadow touching the bullish trendline. Since the price bounced off the trendline, continued bullishness is expected. On the other hand, the Williams%R indicates short term bearishness and the On-Balance Volume indicator may be starting to show bearish divergence with the price chart. IYZ should be watched closely. A break above the ascending triangle resistance will be very bullish. A break below the (bullish) trend line will be very bearish. Entry on long or short position should be done with a stop order.
iShares DJ US Technology
ETF Symbol: IYW
DJ US Technology has had a good bullish run for the last two weeks. This ETF appears to be overbought and is due for a short term pullback to either of the support levels shown.
iShares DJ Transportation Average
ETF Symbol: IYT
DJ Transportation Average previously broke out of an ascending triangle and continues to trend upward while staying above the trend line. All indicators are bullish and I expect that the price will continue to "hug" the bullish trendline. If a position is established then a protective stop should be placed below the trendline.
iShares DJ US Basic Materials
ETF Symbol: IYM
DJ US Basic Materials has broken out of an ascending triangle and also the 200 day simple moving average. When both occur simultaneously, it usually results in a significant move upward. This ETF **may** retrace back to the support level shown on the chart but this will likely depend on the overall stock market action. If the stock exchange starts out down on Monday then it would be prudent to place a limit order near the support level. Otherwise just buy at market.
iShares DJ US Consumer Goods
ETF Symbol: IYK
DJ US Consumer Goods advanced mid-week to the next resistance level then retreated as expected. There may be a minor retreat back to the trendline for early this coming week. This is supported by the Williams%R indicator. If the position was sold last week then it should be re-established using a limit order near the trendline. If still holding this ETF then continue to do so.
iShares DJ US Industrial
ETF Symbol: IYJ
DJ US Industrial is still going strong. This ETF appears to be overbought presently and should retreat back to the (bullish) trendline. When it does it will be a great buying opportunity. (Patience is a virtue).
iShares DJ US Healthcare
ETF Symbol: IYH
DJ US Healthcare has an interesting stock chart. The ETF price continues to float upward but I expect it will eventually stall. It will likely fall to the red line shown on the chart.
iShares DJ US Financial
ETF Symbol: IYF
DJ US Financial has broken out of a symmetrical triangle and has moved above the 200 day simple moving average and a local resistance level. IYF continues to be bullish so long as it stays above the support level.
iShares DJ US Energy
ETF Symbol: IYE
DJ US Energy broke out of the ascending triangle then immediately retraced but has so far held up above the triangle top. The price chart still appears bullish but the Williams%R indicates the pullback may not be complete. The long position should be held but with a tight stop. If the price drops below the trend line(s) then consider reversing the position and going short.
iShares DJ US Consumer Services
ETF Symbol: IYC
DJ US Consumer Services has continued its bullish trend but I'm not sure how much longer it will defy gravity. Stay on the sidelines until the price comes down to the trendline.
iShares DJ US Utilities
ETF Symbol: IDU
DJ US Utilities appears to be preparing to start moving upward if the OBV bullish divergence signal is correct. I'd stay on the sidelines until seeing the start of a bullish move however.
Disclosure: The author currently holds positions in iShares IYE DJ US Energy, IYF DJ US Financial and IYK DJ US Consumer Goods.