After Thursday’s Big Selloff, Outlooks are Mixed for Select Sector SPDR ETFs
September 3 saw the most significant across the board selling the market has seen in the last three months. As I write this during the morning session of Friday, September 4, we are seeing some following through selling with all 11 main sectors down—just as they were on Thursday.
Looking at Tickeron’s Scorecard for the 11 Select Sector SPDR ETFs, there are only three sectors that are considered buys at this point. The Financial Select Sector SPDR (XLF) is rated as the only “strong buy”. The Real Estate Select Sector SPDR (XLRE) and the Communication Services Select Sector SPDR (XLC) are each rated as a “buy”.
There are four sectors that are rated as “holds”. The one that jumped out at me was the Technology Select Sector SPDR (XLK) which has been hit the hardest over the last two days. The hold ratings also include the consumer staples sector, the consumer discretionary sector, and the healthcare sector.
On the bearish side, we see four sector ETFs with “sell” or “strong sell” ratings. The only one rated as a “strong sell” is the Energy Select Sector SPDR (XLE). The ETFs that are rated as “sells” right now are the Industrial Select Sector SPDR (XLI), the Utilities Select Sector SPDR (XLU), and the Materials Select Sector SPDR (XLB).
Because these are ETFs, we don’t have a fundamental screener like we would with individual stocks. But we do have the technical analysis screener and it shows a number of bearish signals from two specific indicators.
The RSI Indicator saw six of the sector SPDR ETFs generate bearish signals on September 3. They included the ETFs for consumer staples, consumer discretionary, technology, industrials, communication services, and materials. The financial sector generated a bearish signal 15 days ago.
The other indicator that has produced a great deal of bearish signals is the Bollinger Bands. Four of the select sector SPDRs produced bearish signals on 9/3 and another one produced a bearish signal on 9/2. The sectors seeing the bearish signals from the Bollinger Bands include consumer staples, real estate, healthcare, and industrials. The one that generated a bearish signal on Wednesday was the materials sector.
If we go out a little further, 10 of the 11 select sector SPDRs have generated bearish signals from the Bollinger Bands within the last 20 days. The only sector that hasn’t generated a sell signal is the energy sector.
The idea behind this article was to show investors where the various select sector SPDR ETFs stand after the big selloff on Thursday. I wanted to show how the artificial intelligence that Tickeron employs viewed the various sectors. Right now there is a lot of emotion that is likely dictating what investors are doing—whether it is panic selling or trying to buy the dip. Because Tickeron’s platform uses artificial intelligence, it removes the emotion from the outlook.
As I was writing the article, I realized that it was also becoming somewhat of a tutorial on how subscribers can use Tickeron to help make decisions. There are a number of tools that I use on the platform, but the screener and the scorecard are probably my two favorites. Those two tools give me a great deal of information in a simple format with everything on the same page.
In this case I started with the 11 select sector SPDR ETFs in order to get an idea of what the platform was showing for the different sectors. But I could very easily build a watchlist for my portfolio and then look at the scorecard and screener for my current holdings. This would allow me to check on the ratings and various indicators with a simple click of a button.
At a time when volatility is increasing and stocks are seeing wild swings, Tickeron can help in several ways. As I said before, it can help remove emotions from the decision making process. Secondly, it can help place a great deal of information at your fingertips on a single page.
XLF's RSI Indicator recovers from overbought zone
The 10-day RSI Oscillator for XLF moved out of overbought territory on October 21, 2024. This could be a sign that the stock is shifting from an upward trend to a downward trend. Traders may want to look at selling the stock or buying put options. Tickeron's A.I.dvisor looked at 51 instances where the indicator moved out of the overbought zone. In of the 51 cases the stock moved lower in the days that followed. This puts the odds of a move down at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 68 cases where XLF's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for XLF turned negative on October 25, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 45 similar instances when the indicator turned negative. In of the 45 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where XLF declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
XLF broke above its upper Bollinger Band on October 11, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 08, 2024. You may want to consider a long position or call options on XLF as a result. In of 89 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where XLF advanced for three days, in of 342 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 327 cases where XLF Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
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