Market Overview

4 Sector ETFs Nearing Support

4 Sector ETFs Nearing Support

The current pullback from the early December high has the S&P 500 down 5 percent and below its 50-day moving average for the first time since October.

While the close below the moving average for the second consecutive day on Tuesday is a red flag, it is not the ultimate sell signal.

The last few pullbacks in the index have breached the indicator for a few days before the buyers jumped into the market.

The 50-day moving average is an important technical tool because it is a line that can indicate the trend of the stock or index visually. It represents the average price of the stock over the last 50 days of trading.

There are a number of sector ETFs that are sitting on or near 50-day moving averages.

Related Link: Bank Of America's Top 10 Stocks For 2015

iShares Dow Jones Transportation Average

The iShares Dow Jones Transport. Avg. (ETF) (NYSE: IYT) tracks 22 different transportation stocks across five sectors within the industry. IYT is one of the many sector ETFs that is currently sitting on its 50-day moving average.

The ETF has fallen 5 percent since the last week in November. The pullback has been accompanied by higher than average volume, which is not a positive technical sign. However, the transportation ETF managed to close just above the moving average on December 16, which is constructive.

Select Sector Financial SPDR

The Select Sector Financial Slct Str SPDR Fd (NYSE: XLF) tracks 87 publicly traded companies in the financial sector in which more than 36 percent are in bank stocks.

XLF experienced a very impressive 11 percent rally through the second half of October and November, however the ETF has fallen 5 percent since the first week in December. The ETF is currently sitting on its 50-day moving average, which is at $23.75.

Select Sector Industrial SPDR

The Sector Spdr Trust Sbi (NYSE: XLI) is made up of 64 publicly traded companies across 12 sectors within the industrial industry.

A nearly 6 percent pullback in the price of the ETF from an all-time high has XLI just below the 50-day moving average and sitting on price support from earlier this year.

Select Sector Consumer Staples

The Consumer Staples Select Sect. SPDR (ETF) (NYSE: XLP) tracks 42 publicly traded consumer staple companies that are spread out among six sectors within the industry.

The ETF has held up well during the recent market sell-off and is only down 3.5 percent from the all-time high. The 50-day moving average is currently at $47.20.


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