The S&P 500 SPDR (ARCA:SPY) put in a new high on February 28, aligning with March's pattern for being a strong month for stocks. Over the last 20 years, March has finished higher than where it started 74% of the time (reference 1), though the last twenty years have been bullish overall, so that will bias the number. Here are the sectors to watch this week.

Materials Select Sector SPDR (ARCA:XLB) pulled ahead of its former high ($46.57) last week, putting in a new high at $47.25. This follows the breakout of a pennant formation which occurred in the vicinity of that former high. The first upside target is at $47.85. The target is within reach this week, as the average weekly range is $1.21. A further target, which could take a number of weeks to hit, is $49.20. If the price proceeds lower from current levels and drops below $45.50, it indicates the potential for a double top and a false upside breakout.

Technology Select Sector SPDR (ARCA:XLK) is consolidating just above the former high of $36.05. This consolidation has taken the form of a flag, with the strong run-up representing the flag pole. This is typically a continuation pattern, providing targets of $37.25 and $38.15. With a weekly average range of $0.81 it may take a week or two for the first target, and multiple weeks for the second, to be reached. If the price drops below $35.75 a potential double top could be forming.

GlaxoSmithKline (NYSE:GSK) has a similar pattern to the technology ETF. After a strong surge of more than 10% off the February low, the price has consolidated between $56.73 and $55.46. If the price breaks above that consolidation, it signals another, likely sharp, advance. Targets are $59 and and $61.25. Support is present from $55.50 down through $54. A drop below $54 put the price back in a former range. Support for that long-term range is near $51.

Weatherford (NYSE:WFT) declined from a major trend high of $17.38 in November, to $13.07 in early February. Since that low, the stock has seen a more than 25% jump, closing at $16.67 on February 28. As the price rises, the $17 region is likely to act as strong resistance, creating an inflection point. Weakness in this area presents a shorting opportunity; with a stop just above the high (yet to be determined) in the resistance area. Downside targets are just above $15, $14 and $13. A continued strong rally above the area means another uptrend is in place, and buying opportunities occur on pullbacks.

The Bottom Line

These sectors have already broken above former highs, and are therefore current leaders. Leadership often changes though, especially in the short-term; what was strong last week may not be strong this week. Despite making new highs, these sectors (and the S&P 500) and stocks are still in proximity to former highs, which means if the price falls from here, there is potential for a double-top topping pattern. Risk can be managed using stop losses and assuring position sizes are not too large for the account or personal risk tolerance.

1. : ---adjust to 20 years, then change chart type to Histogram.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.