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.
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
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
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 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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