By Raghu Gullapalli, contributing writer , SmartStops.net
XLP, XLU, XLV
Yesterday, by closing at S&P 1,317 we finally pushed through three key supports – the 55 day moving average, the support level at S&P 1,330, and last week’s lows at S&P 1,318.50. I think these support breaks open the door for a test of the market’s weekly uptrend lines sitting around S&P 1,280. And many technicians agree once the S&P breaches 1,300, the next stop will be the March lows of S&P 1,250.
Contrary to the action in the broader market, the Consumer Staples Select Sector SPDR (XLP), Utilities Select Sector SPDR (XLU) and Health Care Select Sector SPDR (XLV), have all been in a strong uptrend. These up trends have been challenged and these Sector ETFs may soon come in line with the broader market.
The Consumer Staples Select Sector SPDR (XLP) is still trading well above its 55 day moving average but is now being supported by the 21 day moving average. Given the price action the prior two sessions, it would be prudent to be aware of the risk of entering a new position at this juncture. Smartstops.net has the short-term stop at $31.60 and the long-term stop at $31.13
The Utilities Select Sector SPDR (XLU) has begun to pullback as well. Now being supported by its 21 day moving average. And unless this pullback is a period of rest before the sectors continued push upwards, it will more likely cut through both the 21day and 55 day moving averages. SmartStops.net has the short-term stop at $33.18 and the long term-stop at $31.77
The Health Care Select Sector SPDR (XLV) which has been darling of the talking heads on CNBC is now facing a similar challenge to its strong up trend. This mornings poor earnings from Medtronic (MDT) cannot have helped the sectors drive up. The correction look like it is beginning to gain momentum, now that the ETF is trading below its 21day moving average. SmartStops.net has the short-term stop at $35.23 and the long–term stop at $34.46