How to Trade the Select Sector SPDR Funds

The medical sector was 8.1% overvalued at the end of July and is 5.9% overvalued today. My benchmark for this sector is the Health Care Select Sector SPDR Fund(XLV) , and its daily chart profile shows declining momentum. On Aug. 8 I wrote "Book Profits on Health Care Stocks." XLV ($38.43) is above my annual value levels at $36.71 and $34.12, respectively. My monthly and quarterly risky levels are at $40.06 and $40.83, respectively.

The utilities sector was 12.9% undervalued at the end of July and is 14.6% overvalued today. My benchmark for this sector is the Utilities Select Sector SPDR(XLU) , and its daily chart profile shows oversold momentum with the ETF below its 50-dey simple moving average at $37.17. On July 30 I wrote that investors should "Consider Taking Profits on Utility Stocks," and the high on Aug. 1 was $38.54. XLU ($36.89) is trading around my monthly pivot at $37.00. The 200-day simple moving average is $35.61, and the quarterly and annual risky levels are $39.89 and $43.70, respectively.

The computer and technology sector was 3.1% undervalued at the end of July and is 12.4% overvalued today. My benchmark for this sector is the Technology Select Sector SPDR Fund(XLK) , and its daily chart profile shows overbought momentum.

With XLK we show that Tuesday was "key reversal" day where the day's close was below Monday's low after setting a new multiyear high. On Aug. 9 I provided "Buy and Trade" guidelines for "Trading Technology and Telecom Stocks." XLK ($30.58) is trading between my annual value level at $25.48 and my monthly and quarterly risky levels at $31.40 and $32.18, respectively. My annual pivot is at $29.93.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.