How to Trade the Health Care, Financial and Tech ETFs Rising This Week

NEW YORK (TheStreet) -- The Standard & Poor's 500 needs to end this week with a close above its key weekly moving average of 2,103.6 to avoid having a negative weekly chart

There are three sector exchange-traded funds that can help the S&P, currently at 2,098, do that Friday.

The first, Health Care Select Sector SPDR (XLV) exchange-traded fund, is up 9.5% for the year to date, outperforming the gain of 2.4% for the S&P 500. Also positioned to help is the Financial Select Sector SPDR Fund (XLF). While up just 1.7% year to date, this ETF will likely end the week with a positive weekly chart.

Finally, there's the Technology Select Sector SPDR Fund (XLK), which is up 4.1% for the year to date.

All have positive weekly charts, unlike two other sector ETFs outperforming the S&P 500 for the year to date but poised for decline: the Materials Select Sector SPDR Fund (XLB) with a gain of 4% year to date, and the Consumer Discretionary Select Sector SPDR Fund (XLY) with a gain of 6.6% year to date.

Let's look at the weekly charts for the three positive sector ETFs and provide trading guidelines.

Here's the weekly chart for the Financial ETF.


Courtesy of MetaStock Xenith

The Financial ETF recently traded at $25, up 1.3% year to date, and set a multiyear intraday high of $25.20. The ETF is above its 50-day and 200-day simple moving averages of $24.51 and $24.04, respectively.

The weekly chart will be positive if the ETF ends the week on June 12 above its key weekly moving average of $24.69. This ETF has been above its 200-week simple moving average since the week of June 29, 2012 when this average was $14.42. This moving average is now $19.09 as the "reversion to the mean."

Investors looking to buy the finance ETF should place a good till canceled limit order to purchase the ETF drops to $22.51, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the ETF if it rises to $26.77, which is a key level on technical charts until the end of June.

Here's the weekly chart for the Health Care ETF.


Courtesy of MetaStock Xenith

The Health Care ETF is at $75, up 9.3% year to date, and set a multiyear intraday high of $76.01 set on March 20. This ETF is above its 50-day and 200-day simple moving averages of $73.78 and $69.64, respectively.

The weekly chart will be positive if the ETF ends the week on June 12 above its key weekly moving average of $74.25. This ETF has been above its 200-week simple moving average since the week of Oct. 7, 2011 when this average was $30.27. This moving average is now $50.56 as the "reversion to the mean".

Investors looking to buy the health care ETF should place a good till canceled limit order to purchase the ETF drops to $72.10, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the ETF if it rises to $76.27, which is a key level on technical charts until the end of June.

Here's the weekly chart for Technology ETF.


Courtesy of MetaStock Xenith

The Technology ETF is close to $43, up 3.7% year to date, but is below its multiyear intraday high of $43.81 set on May 27. This ETF is above its 50-day and 200-day simple moving averages of $42.73 and $41.38, respectively.

The weekly chart will be positive but overbought if the ETF ends the week on June 12 above its key weekly moving average of $42.94. This ETF has been above its 200-week simple moving average since the week of Sept. 17, 2010 when this average was $21.79. This moving average is now $33.26 as the "reversion to the mean".

Investors looking to buy the technology ETF should place a good till canceled limit order to purchase the ETF drops to $41.94, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the ETF if it rises to $44.13, which is a key level on technical charts until the end of June.

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

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