Utilities, Energy, Health Care Are the ETFs to Beat This Year

NEW YORK (TheStreet) -- As the second half of 2014 begins, I'm providing key trading information on the 11 exchange-traded funds I've been following for traders and investors including the Utilities Select Sector SPDR Fund (XLU) and the Health Care Select Sector SPDR Fund (XLV).

I have new monthly, quarterly and semiannual value levels, pivots and risky levels.

So far this year it's been difficult to pick stocks because many have had double-digit year-to-date gains or losses before or after reporting earnings. This makes ETFs a more conservative, safer investment. Second-quarter earnings season begins next week.

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The Utilities Select Sector SPDR Fund ended the first half of the year up 17%, but in the first two days of July the year-to-date gain has been cut to 13%. The weekly chart shows a potential key reversal given a close Thursday below last week's low at $43.91.

In second place this year is the Energy Select Sector SPDR Fund (XLE), which is up 13%, but this ETF may have peaked at $101.52 on June 23.

Third place is a tie between the Health Care Select Sector SPDR Fund and the iShares Dow Transportation Average ETF (IYT), both of which are up 12% year to date. The health care ETF set a new all-time high at $62.07 on Wednesday, taking a fractional lead over transports.

The profiles below provide trading guidelines for the 11 ETFs. Two "Crunching the Numbers" follow.

Materials Select Sector SPDR Fund (XLB) ($49.82, up 7.8% year to date) set an all-time intraday high at $49.96 on July 1 and remains above all five key moving averages in today's first table.

The weekly chart is positive but overbought with its five-week modified moving average at $49.02. Semiannual and annual value levels are $44.59 and $44.35, respectively, with quarterly and semiannual risky levels at $51.09 and $53.91, respectively.

Industrial Select Sector SPDR Fund (XLI) ($54.30, up 3.9% YTD) set an all-time intraday high at $55.82 on June 9 and is now below its 21-day simple moving average at $54.64 and above all other key moving averages in today's first table.

The weekly chart is positive but overbought with its five-week MMA at $54.05. Semiannual and annual value levels are $51.45 and $43.85, respectively, with monthly and quarterly risky levels at $57.16 and $58.22, respectively.

Consumer Discretionary Select Sector SPDR Fund (XLY) ($67.55, up just 1.1% YTD) set an all-time intraday high at $67.85 on March 7, which is being challenged this week with this ETF above all five key moving averages.

The weekly chart is positive with its five-week MMA at $66.03. Semiannual and annual value levels are $64.94 and $52.13, respectively, with a monthly pivot at $67.90, and semiannual and quarterly risky levels at $74.14 and $74.17, respectively.

Consumer Staples Select Sector SPDR Fund (XLP) ($44.84, up 4.3% YTD) set an all-time intraday high at $45.71 on June 19 and is below its 21-day SMA at $44.96 but above the other four key moving averages in today's first table.

The weekly chart is positive but overbought with its five-week MMA at $44.61. Semiannual and annual value levels are $43.80 and $40.47, respectively, with a monthly pivot at $44.98 and quarterly and semiannual risky levels at $47.18 and $49.34, respectively.

iShares U.S. Consumer Services ETF (IYC) ($124.72, up 2.7% YTD) set an all-time intraday high at $124.99 on March 7, which is being challenged this week with this ETF above all five moving averages in the first table.

The weekly chart is positive but overbought with its five-week MMA at $122.40. Semiannual and annual value levels are $117.91 and $95.38, respectively, with monthly and quarterly risky levels at $126.83 and $135.48, respectively.

Energy Select Sector SPDR Fund ($100.01, up 13% YTD) set an all-time intraday high at $101.52 on June 23 and remains above all five key moving averages in today's first table.

The weekly chart is positive but overbought with its five-week MMA at $97.32. Monthly and annual value levels are $95.67 and $91.32, respectively, with quarterly and semiannual risky levels at $102.23 and $108.01, respectively.

Finance Select Sector Sector SPDR Fund (XLF) ($22.86, up 4.6% YTD) set a multiyear intraday high at $22.98 on July 1 and is above all five key moving averages.

The weekly chart is positive with its five-week MMA at $22.52. Semiannual value levels are $22.40 and $19.70 with monthly and quarterly risky levels at $23.61 and $23.35, respectively.

Health Care Select Sector SPDR Fund ($62.07, up 12% YTD) set an all-time intraday high at $62.07 on July 2 and is above all five key moving averages.

The weekly chart is positive but overbought with its five-week MMA at $60.09. Semiannual value levels are at $61.53 and $51.59 with monthly and quarterly risky levels at $63.54 and $64.15, respectively.

Utilities Sector SPDR Fund ($42.97, up 13% YTD) set an all-time intraday high at $44.36 on June 30 but is below its 21-day SMA at $43.22.

The weekly chart is neutral with its five-week MMA at $42.83 as its stochastic reading is declining. Quarterly and semiannual value levels are $41.70 and $40.42, respectively, with monthly and semiannual risky levels at $43.43 and $46.36, respectively.

Technology Select Sector SPDR Fund (XLK) ($38.78, up 8.5%YTD) set a multiyear intraday high at $38.86 on July 1 and is above all five key moving averages.

The weekly chart is positive but overbought with its five-week MMA at $37.81. Semiannual and annual value levels are $34.61 and $32.07, respectively, with a quarterly pivot at $38.50, and monthly and semiannual risky levels at $39.57 and $41.10, respectively.

iShares Dow Transportation ($147.63, up 12% YTD) set an all-time intraday high at $148.78 on July 1 and is above all five key moving averages.

The weekly chart is positive but overbought with its five-week MMA at $144.35. Quarterly and annual value levels are $132.78 and $111.80, respectively, with a quarterly pivot at $147.62, and monthly and semiannual risky levels at $150.26 and $151.01, respectively.

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

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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