Want a Safe, Dividend-Paying Performer? Think Utilities

The 10 sectors of the S&P 500 have positive weekly charts but utilities are doing the best.
By Richard Suttmeier ,

Global investors continue to seek dollar-denominated investments, particularly those that pay dividends greater than the 1.587% yield on the U.S. 10-year Treasury note and the 2.3% on the U.S. 30-year bond. The most popular choice has been global utility companies, and the easiest way to buy these is through the exchanged-traded fund that tracks them.

The utilities ETF has a sector-leading gain of 21.9% year to date and has become overbought as all ten S&P 500 ETFs have positive weekly charts. The consumer staples and health care sectors are also overbought with year-to-date gains of 9.9% and 4.1%, respectively.

The S&P 500 SPDR ETF (SPY) - Get Report set an all-time high of $217.37 last week and is up 6.6% year to date. This strength was led by new highs set by the industrial and technology sectors last week at $58.99 and $45.88, respectively. These sectors have year-to-date gains 10% industrial and 7% technology.

While not setting new highs materials and energy sectors outperform the market with gains of 12.1% and 13.3% year to date, respectively.

The only sector without a year-to-date gain is finance, down a fractional 0.6%. In my opinion you cannot have a bull market for stocks with a bear market for regional banks and that part of the finance sector is 16.5% below its multiyear high set a year ago, as measured by the KBW regional bank index.

Here's this week's scorecard for the 10 exchange-traded funds that represent each of the sectors of the S&P 500. 

The weekly chart for the Materials Select Sector SPDR Fund (XLB) - Get Report is positive with the ETF above its key weekly moving average of $47.38 and above its 200-week simple moving average of $44.67. The weekly momentum reading ended last week at 71.26 up from 65.28 on July 15.

Courtesy of MetaStock Xenith

Investors looking to buy the materials ETF should do so on weakness to $42.84, which is a key level on technical charts until the end of September. Beware that the downside risk is to $35.37 by the end of 2016.

Investors looking to reduce holdings should consider selling strength to $54.67, which is a key level on technical charts until the end of 2016.

The weekly chart for the Industrial Select Sector SPDR Fund (XLI) - Get Report is positive with the ETF above its key weekly moving average of $56.82 and above its 200-week simple moving average of $50.37. The weekly momentum reading rose to 76.64 last week up from 67.83 on July 15.

Courtesy of MetaStock Xenith

Investors looking to buy the industrial ETF should do so on weakness to $54.82 which is a key level on technical charts until the end of September.

Investors looking to reduce holdings should do so on strength to $64.51 and $67.11, which are key levels on technical charts until the end of 2016.

The weekly chart for the Consumer Discretionary Select Sector SPDR Fund (XLY) - Get Report is positive with the ETF above its key weekly moving average of $79.60 and above its 200-week simple moving average of $66.98. The weekly momentum reading rose to 73.58 up from 62.80 on July 15.

Courtesy of MetaStock Xenith

Investors looking to buy the consumer discretionary ETF should do so on weakness to $71.86, which is a key level on technical charts until the end of 2016.

Investors looking to reduce holdings should consider selling strength to $84.00, which is a key level on technical charts until the end of September.

The weekly chart for the Consumer Staples Select Sector SPDR Fund (XLP) - Get Report is positive but overbought with the ETF above its key weekly moving average of $54.53 and above its 200-week simple moving average of $45.17. The weekly momentum reading rose to 86.12 this week up from 82.61 on July 15, moving further above the overbought threshold of 80.00.

Courtesy of MetaStock Xenith

Investors looking to buy the consumer staples ETF should do so on weakness to $46.64, which is a key level on technical charts until the end of 2016.

The $55.60 level should remain a magnet until the end of September.

Investors looking to reduce holdings should consider selling strength to $58.35, which is a key level on technical charts until the end of 2016.

The weekly chart for the Energy Select Sector SPDR Fund (XLE) - Get Report is positive with the ETF above its key weekly moving average of $67.52 and well below its 200-week simple moving average of $77.95. The weekly momentum reading inched higher to 74.43 up from 74.16 on July 15.

Courtesy of MetaStock Xenith

Investors looking to buy the energy ETF should do so on weakness to $54.40 which is a key levels on technical charts until the end of 2016.

Investors looking to reduce holdings should consider selling strength to $79.35, which is a key level on technical charts until the end of 2016.

The weekly chart for the Financial Select Sector SPDR Fund (XLF) - Get Report is positive with the ETF above its key weekly moving average of $23.12 and above its 200-week simple moving average of $21.76. The weekly momentum reading rose to 62.90 up from 55.02 last week on July 15.

Courtesy of MetaStock Xenith

Investors looking to buy the finance ETF should do so on weakness to $22.73, which is a key level on technical charts until the end of this week.

Investors looking to reduce holdings should consider selling strength to $24.17 which is a key level on technical charts until the end of September.

The weekly chart for the Health Care Select Sector SPDR Fund (XLV) - Get Report is positive but overbought with the ETF above its key weekly moving average of $72.42 and above its 200-week simple moving average of $60.68. The weekly momentum reading rose to 81.92 last week up from 74.63 on July 15.

Courtesy of MetaStock Xenith

Investors looking to buy the health care ETF should do so on weakness to $60.59 which is a key level on technical charts until the end of 2016.

Investors looking to reduce holdings should consider selling strength to $78.87, which is a key level on technical charts until the end of September.

The weekly chart for the Utilities Select Sector SPDR Fund (XLU) - Get Report remains positive but overbought with the ETF above its key weekly moving average of $51.32 and well above its 200-week simple moving average of $42.13. The weekly momentum reading ended last week at 90.14 last week versus 90.11 on July 15, with both well above the overbought threshold of 80.00.

Courtesy of MetaStock Xenith

Investors looking to buy the utilities ETF should do so on weakness to $48.26, which is a key level on technical charts until the end of September.

The $50.05 should be magnet for the remainder of 2016.

Investors looking to reduce holdings should consider selling strength to $53.86, which is a key level on technical charts until the end of this week.

The weekly chart for the Technology Select Sector SPDR Fund (XLK) - Get Report is positive with the ETF above its key weekly moving average of $44.12 and well above its 200-week simple moving average of $37.55. The weekly momentum reading rose to 73.10 this week up from 63.23 on July 15.

Courtesy of MetaStock Xenith

Investors looking to buy the technology ETF should do so on weakness to $35.69 which is a key level on technical charts until the end of July 2016.

Note that last week's strength reached my key level for September of $45.54.

Investors looking to reduce holdings should consider selling strength to $48.13, which is a key level on technical charts until the end of 2016.

The weekly chart for the Shares Transportation Average ETF (IYT) - Get Report is positive with the ETF above its key weekly moving average of $139.16 and above its 200-week simple moving average of $133.45. The weekly momentum reading rose to 56.46 up from 44.76 on July 15.

Courtesy of MetaStock Xenith

Investors looking to buy the transportation ETF should do so on weakness to $136.24, which is a key level on technical charts until the end of 2016.

The $142.20 level should be a magnet until the end of September.

Investors looking to reduce holdings should consider selling strength to $167.06 and $172.27, which are key levels on technical charts until the end of 2016.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

Loading ...