Uptrend (mostly) intact/Sector ETF highlights
A mostly sideways week in the markets has left the trend picture still positive on balance – consistent with the view that the current uptrend is still intact. This remains my perspective for now, as long as the S&P 500 doesn’t break down below the 1270-1280 level.
However, not all of the major indices are positive. The Russell 2000, representing small-cap stocks, has swung back to negative, as have a couple of sector ETFs (see below) – something to keep an eye on.
Sector ETF highlights
Seven of the nine Sector SPDR ETFs I follow currently have positive trend spectrums. Consumer Staples (XLP) is probably the strongest, although it’s getting close to upside resistance (horizontal red line):
Utilities (XLU) has also been doing well, but could be losing upside momentum:
Health Care (XLV) has also had a good run, and is also approaching upside resistance:
The Consumer Discretionary Sector SPDR (XLY) is probably the weakest of the nine:
And the Industrial Sector SPDR (XLI) is not far behind:
New positions
Merck (MRK) – Last Thursday I sold some September 40 calls against my long position in MRK when my limit order was triggered after the stock traded higher at the open:
MRK has been performing well and looks as if it could go higher over the intermediate term, but its shorter-term trend is unclear. Selling the calls reduced my net cost basis in MRK to about 38.5/share.
Watchlist
“Upside strength” stocks of interest this week include Altria Group (MO), ConAgra Foods (CAG), Federal National Mortgage Association (FNM), Hasbro (HAS), Federal Home Loan Mortgage (FRE), and Kimberley Clark (KMB).
New “oversold” candidates of interest this week include American Axle and Manufacturing Holdings (AXL), Countrywide Financial (CFC), Group 1 Automotive (GPI), Harrah’s Entertainment (HET), Masco (MAS), Norfolk Southern Corp. (NSC), Sonic Automotive (SAH), and Williams-Sonoma (WSM).
