Trade Scenarios for S&P 500 Positioning This Week

If the S&P 500 is able to hold above 2,446 into the end of the week, we remain on the Hold-to-Buy side with short-term capital, asserts Ziad Jasani, of the Independent Investor Institute, Toronto, in his weekly Trader video. A retreat: Hold-to-Sell.

This week starts after the Fed’s Janet Yellen took rates up and called for another hike closer to December 2017.

The S&P 500 didn’t bat an eyelash on the announcement and closed last week hovering under all-time-highs. Since June 2, 2017 we’ve seen another short-term consolidation at highs, and despite softening economic data, lower inflation and a crack in the Technology sector on June 9, Equity bulls are readying to push out to new highs (2,447-63).

With Oil set to swing-low, the USD stagnating at support, and Technology investors Technology Select Sector SPDR Fund (XLK), PowerShares QQQ (QQQ) holding prices above their 50-Day Averages, the S&P 500 likely stages a limp-out to aforementioned new highs in the front end of the week.

Key sectors that are likely to lead the move:

Technology (XLK)
Energy Select Sector SPDR Fund (XLE)
Miners SPDR S&P Metals & Mining (XME)
Pharma SPDR S&P Pharmaceuticals ETF (XPH)
Biotech SPDR S&P Biotech ETF (XBI)
and Industrial Select Sector SPDR Fund (XLI).
Financials Financial Select Sector SPDR Fund (XLF) SPDR S&P Bank ETF (KBE) stagnate.

Into this weekend, we are expecting a bounce in the USD and Treasury yields that is more likely to put downward pressure on equities overall and in particular Defensive sectors: Utilities Select SPDR Fund (XLU), Consumer Staples Select Sector SPDR Fund (XLP), Real Estate Select Sector SPDR Fund (XLRE) and Technology Select Sector SPDR Fund (XLK).

If the S&P 500 is able to hold above 2,446 into the end of the week, we remain on the Hold-to-Buy side with short-term capital. However, if the S&P 500 implies a move back to 2,400 with a close below 2,330 in the front end of the week we move to the Hold-to-Sell side.

Mid-To-Longer-Term investors don’t have a Sell decision this week unless the S&P 500 breaks below 2,400.

S&P 500 Sector Positioning (Out/Under Performance):

• Sectors poised to out-perform are: Financials (XLF, KBE), Energy (XLE), Miners (XME), Technology (XLK), and Industrials (XLI)
• Sectors poised to neutral-perform: Healthcare (XBI, XPH), Telecom iShares US Telecommunications ETF (IYZ), Materials Materials Select Sector SPDR Fund (XLB), Discretionaries Consumer Discretionary Select Sector SPDR Fund (XLY).  
• Sectors more likely to under-perform : Staples (XLP), Utilities (XLU), REITs (XLRE).

View the latest videos from Ziad Jasani of the Independent Investor Institute here