Trading Index ETFs: Semiconductors and Utilities Are in the Lead

NEW YORK (TheStreet) -- Today we profile eight exchange-traded funds that closely track major equity indices and U.S. Treasury bonds. At the end of April, utilities were in the lead, but then market leadership shifted to bonds and then to transports. We are now in the final stretch of the first half of 2014 with semiconductors leading utilities by a nose.

Transports are in position to be a part of a trifecta as bonds have been fading since the end of May. The Dow Jones Industrial Average, S&P 500, Nasdaq, Nasdaq 100 and Russell 2000 have never been in contention.

Here are the profiles for the eight ETFs followed by two "Crunching the Numbers" tables.

SPDR Dow 30 ETF (DIA) ($169.09, up 2.2% year to date) set an all-time intraday high at $169.58 on June 9 and has been above its 200-day simple moving average now at $160.39 since setting its 2014 intraday low at $153.12 on Feb. 5.

This ETF, also known as "Diamonds," has a positive but overbought weekly chart with its five-week modified moving average at $166.60. Semiannual and quarterly value levels are $167.82 and $164.18, respectively, with a monthly risky level at $174.58.

SPDR S&P 500 ETF (SPY) ($196.48, up 6.4% YTD) has been above its 200-day SMA now at $181.73 since November 2012 and set an all-time intraday high of $196.60 on Thursday.

The weekly chart is positive but overbought with its five-week MMA at $191.79 and has been above its 200-week SMA now at $146.28 since October 2011. Quarterly and semiannual value levels are $185.03 and $179.50, respectively, with a weekly pivot at $195.18 and a monthly risky level at $202.42.

PowerShares QQQ Trust ETF (QQQ) ($92.91, up 6.1% YTD) set a multiyear intraday high at $93.17 on Thursday and has been above its 200-day SMA now at $85.79 since the beginning of 2013.

The weekly chart is positive but overbought with its five-week MMA at $90.48. Semiannual value levels are $84.59 and $84.58 with a weekly pivot at $93.10 and monthly risky level at $96.86. The pivot was crossed several times at Thursday's high.

iShares Transportation ETF (IYT) ($147.06, up 12% YTD) set an all-time intraday high at $148.18 on June 9 and has been above its 200-day SMA now at $130.88 since December 2012.

The Transport ETF has a positive but overbought weekly chart with its five-week MMA at $142.70. Monthly and semiannual value levels are $144.40 and $132.17, respectively, with a weekly risky level at $147.16, which is below the all-time high.

iShares Russell 2000 ETF (IWM) ($117.86, up 2.2% YTD) had been trading back and forth around its 200-day SMA now at $112.18 between April 14 and June 4 and traded as high as $118.23 on Thursday.

The weekly chart is positive with its five-week MMA at $114.36 and has been above its 200-week SMA now at $88.09 since October 2011. Weekly and semiannual value levels are $113.14 and $112.41, respectively, with monthly and semiannual risky levels at $120.72 and $126.66, respectively.

Utilities Sector ETF (XLU) ($44.11, up 16% YTD) set a multiyear intraday high at $44.16 on Thursday and has been above its 200-day SMA now at $39.69 since Feb. 6.

The weekly chart is positive with its five-week MMA at $42.65. Weekly and annual value levels are $42.74 and $41.19, respectively, with no risky levels until next week.

Semiconductor Sector ETF (SMH) ($49.36, up 16% YTD) set an all-time intraday high at $49.37 on Thursday and has been above its 200-day SMA now at $42.83 since the beginning of 2013.

The weekly chart is positive but overbought with its five-week MMA at $46.82. Weekly and semiannual value levels are $46.86 and $42.71, respectively, with a monthly pivot at $48.51 and semiannual risky level at $49.81.

iShares 20+ Year Treasury Bond ETF (TLT) ($110.96, up 8.9% YTD) began 2014 trading as low as $101.76 on Jan. 3 after setting a multiyear low at $101.17 on Dec. 31. The bond ETF has been above its 200-day SMA now at $107.17 since March 13. It traded as high as $115.19 on May 29 and has since faded below its 50-day SMA at $111.79.

The weekly chart is negative with the ETF between its 200-week SMA at $110.35 and its five-week MMA at $111.66. We will not have a value level until next week with a monthly pivot at $111.22 and annual and quarterly risky levels at $114.99 and $115.64, respectively. The high was a failed test of the first risky level.

Crunching the Numbers With Richard Suttmeier: Moving Averages & Stochastics

This table provides the technical status for the stocks profiled in today's report.

There are five columns with moving average titles: Five-Week Modified Moving Average; 21-Day Simple Moving Average; 50-Day Simple Moving Average; 200-Day Simple Moving Average; and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with a reading of oversold, rising, overbought, declining or flat.

Interpretations: Stocks below a moving average are listed in red.

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance level and as a "reversion to the mean" over a rolling three- to five-year horizon. (Even Apple (AAPL) declined to its 200-week SMA in June 2013.)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three- to five-day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance level, and I consider this level as a shorter-term "reversion to the mean" over a rolling six- to 12-month horizon. (Even Apple tested or crossed its 200-day SMA in nine of the last 10 years.)

Crunching the Numbers With Richard Suttmeier: Earnings & Where to Buy & Where to Sell

This table presents the EPS estimates including date and before or after the close, and where to buy on weakness and where to sell on strength.

"EPS Date" is the day the company reports its quarterly results.

"EPS Estimate" is the EPS estimate from Wall Street analysts.

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Investors who wish to buy a stock should use a good-'til-canceled limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

At the time of publication the author held no positions in any of the stocks mentioned.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

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Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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