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Sunday, December 2, 2007

More Charts - XLF, IYR, XLK

I just wrote a post looking at the charts of the ETFs that track the major averages. In this post I'd like to look at the ETFs that track REITs, financials and technology using the TradeRadar software and traditional technical analysis.

iShares Dow Jones US Real Estate ETF (IYR)
  1. Daily Chart / Sell Signal: with the Window Start set way back at the low made back around 5/23/06 we still have a clear TradeRadar SELL signal. There is no hint of it moving out of the SELL zone yet
  2. Daily Chart / Buy Signal: with the Window Start set at 2/7/07 there is a BUY signal almost formed but the peak has not yet made it into the BUY zone. With the Window Start set at 10/7/07 and the filter set to 4 days there is a better BUY signal that is just moving into the BUY zone though with somewhat weak signal strength.
  3. Weekly Chart / Sell Signal: with the Window Start set back in June of 2006 the SELL signal is still strong and solid
  4. Weekly Chart / Buy Signal: with the Window Start set at 2/12/07, this ETF's all-time high, there is no hint of a BUY signal developing. With the Window Start set at 10/1/07, there is still no BUY signal though with the filter set to its minimum there is a signal starting to partially form but it is far from actionable.
  5. Moving Average Analysis: 20, 50 and 200-day moving averages are all pointing downward. The 20-day has recently moved below the 50-day, a typically bearish signal. The ETF remains well below the 50-day and the 200-day MA. IYR has just barely moved above its 20-day MA. No actionable signals here except maybe for a very short-term trade.
  6. Support / Resistance Analysis: the first area is around $72 and the second is around $74.50. With the ETF currently at $70 it has not even reached resistance after a huge runup in the market and and an uptick in IYR itself
  7. Trend Analysis: IYR is still well below its long-term downtrend that started in February 2007. There is also a short-term, steeper trend line made up of the points at 10/11/07, 10/31/07 and 11/14/07. IYR is still just a bit below this trend line. Still no actionable signal here.
Outlook: still negative. The charts indicate there is potential for a turn-around but so far, there has been no confirmation of a real breakout or reversal that I would risk putting money on.

Select Sector SPDR Financials (XLF)
  1. Daily Chart / Sell Signal: with the Window Start set way back at the low made back in June 2006 we still have a clear, really strong TradeRadar SELL signal. There is no hint of it moving out of the SELL zone yet
  2. Daily Chart / Buy Signal: with the Window Start set at 5/31/07 there is a BUY signal with the trailing edge 0f the peak just barely making it into the BUY zone. The signal strength, however, is weak. With the Window Start set at 10/4/07 and the filter set to 4 days there is a better BUY signal that is deeper into the BUY zone though with a somewhat weak signal strength.
  3. Weekly Chart / Sell Signal: with the Window Start set back in July of 2006 the SELL signal is still strong and solid
  4. Weekly Chart / Buy Signal: with the Window Start set at 5/29/07, this ETF's all-time high, there is a hint of a BUY signal developing but it is nowhere near complete. With the Window Start set at 10/1/07, we have the same story: partially formed BUY signal that is far from actionable.
  5. Moving Average Analysis: just as we saw with IYR, 20, 50 and 200-day moving averages are all pointing downward. The 20-day has recently moved below the 50-day, a typically bearish signal. The ETF remains well below the 50-day and the 200-day MA. XLF has made a nice move above its 20-day MA with a gap, no less. Still, no reliable actionable signals here except maybe for a very short-term trade.
  6. Support / Resistance Analysis: XLF is currently at $30 and the first area of resistance is around $31.50, the second is around $32 to $32.50 and the third is around $33.50. With the ETF currently at $30 it has not even reached these resistance levels despite a couple of good jumps with gaps.
  7. Trend Analysis: XLF is still far below its long-term downtrend that started back in June 2006. There is also a short-term, steeper trend line made up of the points at 10/11/07, 10/31/07 and 11/14/07. XLF finally jumped above this trend line on Friday.
Outlook: XLF is still far underwater but the fact that it has broken above a short-term trend line is a small positive. The short-term TradeRadar BUY signal, though weak, is another small positive. Still, confirmation of these signals is needed in order to outweigh all the other negatives before initiating a long position.

Select Sector SPDR Technology (XLK)
  1. Daily Chart / Sell Signal: with the Window Start set to 8/16/07 there is a moderate-strength SELL signal. It remains deep in the SELL zone.
  2. Daily Chart / Buy Signal: with the Window Start set to 11/6/07 there is a very, very weak BUY signal. It is so weak as to be nowhere actionable
  3. Weekly Chart / Sell Signal: with Window Start set 7/17/06 there is a solid SELL signal in place
  4. Weekly Chart / Buy Signal: with the Window Start set to 10/29/07 there is a peak forming but it is incomplete, weak and noisy
  5. Moving Average Analysis: XLK is trading in a range between its 50-day and 200-day moving averages. In this case, the 50-day is above the 200-day. A negative is that the 20-day MA has recently moved below the 50-day, a usually bearish move.
  6. Support / Resistance Analysis: XLK just failed to break through resistance around $27. There is more resistance in small steps around $27.70 and $28.25
  7. Trend Analysis: XLK failed to break through the downward sloping trend line formed by points of 11/1/07 and 11/6/07. As a matter of fact, on Friday it just about touched the trend line and fell back, closing with a loss. With respect to the long-term trend, it is still clearly moving upward; however, XLK recently fell below the trend and, though it is now a bit above the trend line it is threatening to fall back below it.
Outlook: XLK has out-performed the other ETFs mentioned in this post but is now showing weakness and a slowing of momentum. It has failed to clear some important price levels despite the rest of the stock market moving up strongly. It appears that the best course of action here is to wait and see which way this ETF goes. There are no compelling signals at this time that would make XLK a buy.

Disclosure: author owns none of the ETFs mentioned in this post

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