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How to Trade the Select Sector SPDR Funds

Stocks in this article: XLB XLY XLI XLP XLF

The consumer staples sector was 11.7% overvalued at the end of July and is 10.2% overvalued today.

My benchmark for this sector is the Consumer Staples Select Sector SPDR (XLP), and its daily chart profile also shows overbought momentum. With XLP, we show that Tuesday was the "key reversal" day where the day's close was below Monday's low after setting a new multiyear high. On Aug. 6 I wrote "Book Profits in Overvalued Consumer Staples." XLP ($35.68) is trading between my annual and semiannual value levels at $32.87 and $31.34, respectively, and my monthly and quarterly risky levels at $36.06 and $37.64, respectively.

The oils-energy sector was 9.2% undervalued at the end of July and is 1.4% undervalued today. My benchmark for this sector is the Energy Select Sector SPDR (XLE), and its daily chart profile shows overbought momentum. On Aug. 1 I provided guidelines for Trading the Undervalued Energy Sector." XLE ($72.09) is above my monthly value level at $68.46, and this week's risky level is at $75.76.

The finance sector was 4.8% overvalued at the end of July and is 9.3% overvalued today. My benchmark for this sector is the Finance Select Sector SPDR Fund (XLF), and its daily chart profile shows overbought momentum. On Aug. 15 I wrote "Time to Book Profits in Financial Stocks: Opinion." XLF ($15.22) is below quarterly and annual risky levels at $15.50 and $15.59, respectively, but I do not show a nearby value level.

The medical sector was 8.1% overvalued at the end of July and is 5.9% overvalued today. My benchmark for this sector is the Health Care Select Sector SPDR Fund (XLV), and its daily chart profile shows declining momentum. On Aug. 8 I wrote "Book Profits on Health Care Stocks." XLV ($38.43) is above my annual value levels at $36.71 and $34.12, respectively. My monthly and quarterly risky levels are at $40.06 and $40.83, respectively.

The utilities sector was 12.9% undervalued at the end of July and is 14.6% overvalued today. My benchmark for this sector is the Utilities Select Sector SPDR (XLU), and its daily chart profile shows oversold momentum with the ETF below its 50-dey simple moving average at $37.17. On July 30 I wrote that investors should "Consider Taking Profits on Utility Stocks," and the high on Aug. 1 was $38.54. XLU ($36.89) is trading around my monthly pivot at $37.00. The 200-day simple moving average is $35.61, and the quarterly and annual risky levels are $39.89 and $43.70, respectively.

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