FINANCIAL ICEBERG
Always consider hidden risks

​
 TECHNICALS

SP500 ​Sectors (SPY ETFs): The Good, the Bad and the Ugly?
  ​March 7 2016 ( From TradingView , SPDR.com  )


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Sectors Technicals $XLK, $XLF, $XLV, $XLY, $XLI, $XLP, $XLE, $XLU, $XLB   #xlk #xlf #xlv #xly #xli #xlp #xle #xlu #xlb 






XLK 
​Information Technology
Price (Left chart)
Relative Price (Sector over SPY Ratio - Right chart)​​ 




XLF
​Financials
​Price (Left chart)
Relative Price (Sector over SPY Ratio - Right chart)​​ 




XLV
​Health Care
​​Price (Left chart)
Relative Price (Sector over SPY Ratio - Right chart)​​ 




XLY
​Consumer Discretionary
​​​Price (Left chart)
Relative Price (Sector over SPY Ratio - Right chart)​​ 




XLI
​Industrials
​​​​​Price (Left chart)
Relative Price (Sector over SPY Ratio - Right chart)




XLP
​Consumer Staples
​​​​Price (Left chart)
Relative Price (Sector over SPY Ratio - Right chart)​​




XLE
​Energy
​​​​​​Price (Left chart)
Relative Price (Sector over SPY Ratio - Right chart)




XLU
​Utilities
​​​​​​​Price (Left chart)
Relative Price (Sector over SPY Ratio - Right chart)




XLB
​Materials
​​​​​​​​Price (Left chart)
Relative Price (Sector over SPY Ratio - Right chart)







Symbol        Description                   Dividend Yield             Price Technical           Relative Strength Technical
​​  SPY      SP500 SPDR                               2.10%                  Range Trade
 ​ XLK     Technology SPDR                       1.80%                      Strong                                      Strong
  XLF      Financials SPDR                         2.08%                      Weak                                        Breakdown
  ​XLV      Health Care SPDR                      1.53%                      Weak                                        At Support
​​  XLY      Consumer Discretionary SPDR  1.46%                      Strong                                      Strong
  XLP      Consumer Staples SPDR            2.45%                      Strong                                      Strong
  ​XLI       Industrials SPDR                        2.12%                      Strong                                      Break Out
  XLE      Energy SPDR                              3.35%                       Weak                                       Break Out
  XLU     Utilities SPDR                             3.37%                      Strong                                      Break Out
  XLB     Materials SPDR                           2.24%                      At Resistance                          Weak





​Investors having some problems finding the best exposure into those volatile markets.
I think that the main factors that will give some positive bias for the remaining of 2016 
will be ​towards the least ​volatile sectors and the one that pays the biggest dividend yield.​

And that investors behavior will bring another year for them of under performance
because becoming too defensive.​

​Let s have a look at different sectors​​​​ and different factors that we should look at
for 2016 in terms of ​sectors rotation and technicals.

Looking at the table on the right side,​​ we must realize that the biggest three sectors
​(Technology, Financials and Health Care) make over 50% of the total asset mix for
a balance (index) portfolio​. The guess in terms of performance for the remaining of
2016 will be between Technology and Financials, and Health Care vs Energy and Materials.​

The chart below explain the big picture in terms of sectors performance throughout 
​the market cycle (Grey Line) and economic cycle ( Blue Line).  It is important to note that 
​market trends ​usually anticipate economic trends by six to nine months. 
​
​For more details: Intermarket Analysis – Profiting from Global Market Relationships by John J. Murphy 
​(John Wiley & Sons, Inc., Hoboken, New Jersey, 2004
​​


SPY ETF
Weekly Chart - Candles




Financialiceberg.Com























And technically speaking, you will find in the table below a broad view of each sector in terms of Price and Relative price (ratio of each sector compare to the SP500; SPY ETF in our case). Also, find at the bottom each chart for each specific sector.


So because we are at late cycle in terms of market timing and investors cautiousness to avoid volatility, here is the expected out performers and under performers sectors for 2016 and the reasons why I expect that: 

Expected Out performers

​​XLP      Consumer Staples SPDR (The Good)
- Dividend yield at 2.45% 
- Low volatility price action sector​ - defensive play
- Strong Technicals
​​
​XLK     Technology SPDR 
- High​ beta sector of 2016
- Lower US Dollar impact on earnings​ than the Industrials or Materials
- Strong Technicals
​
​​XLY      Consumer Discretionary SPDR
- Economy still growing 
- Low oil price giving more discretionary money​ for consumers
​​
​ XLU     Utilities SPDR 
​- Highest Dividend yield at 3.37% 
- Low volatility price action sector​ - defensive play and late cycle best sector
- Very Strong Technicals    

​​XLE      Energy SPDR 
- ​One of the Highest Dividend yield at 3.35%
- ​Most hated sector
- Technical rebound in play​

​Expected under performers

​​​XLF      Financials SPDR (The Bad)
- Margin under pressure since 2007 (flatter US yield curve will put tremendous pressure in 2016)​
- The most volatile sector ex commodities and oil​
- Technical break down in terms of price and relative price
​​
​XLV      Health Care SPDR
- Poor technicals in terms of price action and relative price action
- Rich valuation still
- Low dividend yield at 1.53%​​​
​
​XLI       Industrials SPDR 
- Strong impact from US Dollar will keep investors at bay
- Second ​most volatile sector ex commodities and oil​
​​
​XLB     Materials SPDR ​(The Ugly)
- ​Global economy still weak
- US Dollar strength will keep pressure on the sector​
- ​Weaker technicals than the Energy sector
​​ 
Read also: ​ Sector Performance by Calendar Month
​​​