Watching for Entry in Silver

I've been watching Silver lately, looking for a place to go long. In the chart below, you can see that we are approaching resistance around $14. I would wait for a pullback from that $14 level that we might get. If we do go straight through $14, then I'd look for a pullback to that level. Either way you don't want to chase it here.

Sector Overview

I thought I'd take a look at some of the sectors out there. I'll start out with the ugly, work my way up to the ugly and finish off with the good.

First we have the Financials, via the XLF. Below is a weekly chart. I would initially look to short on rallies up to the declining 50 day moving average. On any breaks above that I would still probably be looking to short at some level of prior resistance, but of course I would have to evaluate the situation before making any trades.

Next we have Consumer Staples. The XLP and the XLF are lead the pack on the downside.

After Financials and Staples we have a few groups that are closer to neutral. This group includes Consumer Discretionary (XLY), Industrials (XLI) and Materials (XLB). These groups do have some positive signs, but are not all that far from breaking to the downside.

OK so we got the bad groups out of the way. Now on to some brighter spots.

First I'll start with Energy. The XLE has made moves similar to the previous three ETF's, but it has held above it's January lows fairly well. Also, note the relative strength versus the S&P.

After that we have technology. The XLK, much like the QQQQ's, have turned a corner over the past couple of months. We have seen improvement in this group and it looks as if it wants to hold it's trendline.

Lastly we have Healthcare. As you can see the XLV has been outperforming the broader market since early 2008. It is one group that actually broke it's "wedge formation" to the upside. It then retreated back into it's range but then quickly regained steam.

The one group I did not include was the Utilities (XLU). I didn't cover it because it has basically flat lined over the past few months. It has made similar moves to the SPY, it just has done if with less volatility. In other words, I think it's kind of boring.

I also want to make the point that there are some good Industries within these Sectors. Within Healthcare, Biotechnology and Health Care providers are doing well. In Tech, Internet and Software names are outperforming. I think it's important to make sure you are in the right Industries, and analyzing the Sectors gives us a broader sense of where the strength is.

Interesting Action in the SLX

The SLX has seen a nice run over past few months, and volume has spiked over the past 2 weeks. We will probably see a big move in this thing one way or the other. Keep it on your radar.

Russia Looking Weak

The RSX is setting up for a nice shorting opportunity. We will probably get a gap down tomorrow so I don't think I'll get a chance to short. If we don't though, I be quick to borrow some shares.

Watchlists

Watchlists are very important. They allow you to monitor how sectors and industries are performing. Creating a watchlist with ETF's is the easiest approach I have found. I have two seperate watchlists, one breaks up the market into sectors and the other does the same for industries. I can then sort these watchlists by percentage change over any period. This is very helpful for finding parts of the market that are under or outperforming. In my watchlists I also include things such as commodities, currencies, and foreign markets. Below are some ETF's I use in my watchlists.

Sector:

XLB: Materials
XLE: Energy
XLF: Financials
XLI: Industrials
XLK: Technology
XLP: Consumer Staples
XLU: Utilities
XLV: Health Care
XLY: Consumer Discretionary


Industry:

DJP: Commodity Index
FXE: Euro
FXI: China
GDX: Gold Miners
GLD: Gold Spot Price
HHH: Internet XLP:
IAI: Brokers
IAK: Insurance
IAT: Regional Banks
IDU: Utilities
IGN: Networking
IHF: Healthcare Providers
IHI: Medical Devices
IYT: Transportation
IYZ: Telecommunications
KBE: Commercial Banks
MOO: Agri-Business
OIH: Oil Service
PBJ: Food and Beverage
PPA: Aerospace/Defense
PPH: Pharmaceuticals
SLX: Steel Producers
SMH: Semiconductors
SWH: Software
TAN: Solar Energy
USO: Crude Oil
XBI: Biotech
XRT: Retailers
FXY: Yen
FXB: Pound

$XAL: Airlines*

The $XAL is an index, not an ETF. The ticker may vary depending on what software package you are using. If you are interested in finding more ETF's to use, ETF Trends is a good place to look.