The following (green highlights) is Monday’s (July 13th) Keys To this Week report for US Stock Market Sectors. It is a Monday morning weekly report that utilizes Asbury Research’s own in-house metrics to identify over- and under-invested sectors of the S&P 500, and to analyze the latest asset flow data in 3 different time frames to identify where the money is going.
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Hope you enjoy the report!
Keys To This Week, July 13th 2015:
US Stock Market Sectors
The green highlights in Table 1 below show that, for the second week in a row, the biggest weekly inflow of assets over the past 1 week, 1 month and 3 months periods went to Financials. This is beneficial to our model’s current overweight status in this sector per Table 2 below.
The red highlights show that the biggest outflow of ETF-related investor assets over the past 1 week, 1 month and 3 months periods came from Industrials, which is beneficial to our model’s current underweight status in this sector.
Chart 1 below shows the historic daily average distribution of investor assets in the 9 Sector SPDR ETFs since our data series began on May 31st, 2006.
Chart 2 below displays the current distribution of these assets through July 10th.
The green highlights show the historically most under-invested sectors are currently, in order of severity: 1) Utilities, 2) Materials and 3) Energy. The red highlights show the historically most over-invested sectors are, also in order of severity: 1) Consumer Discretionary, 2) Health Care and 3) Financials.
Table 2 below lists our current market calls for relative outperformance (green background), relative underperformance (red background), and market performance (blue background) versus the S&P 500 in the 9 sectors of the S&P 500 as represented by the Select Sector SPDR ETFs. The table includes the date that we initiated the call, relative sector performance since then, and in the rightmost column Asbury’s performance relative to the direction of the call.
This week our model moves to outperform in Consumer Staples while retaining an outperform bias in Financials (June 1st) and an underperform bias in Industrials (March 30th).
Consumer Staples: Expanding Investor Assets Fueling Recent Outperformance
Chart 3 below plots the daily relative performance of the Consumer Staples Sector SPDR ETF (XLP) versus the S&P 500 SPDR ETF (SPY) since November in the upper panel, with the daily percentage of ETF sector bet-related assets allocated to Consumer Staples and its 63-day moving average plotted in the lower panel.
The highlighted area in the lower panel shows that these assets expanded above their 63-day moving average last week for the first time since the end of 2014, indicating an emerging trend of quarterly expansion that typically fuels trends of relative sector outperformance versus SPY — just as it has over the past 2 weeks.
As long as this expansion in assets continues, so should recent relative sector outperformance.
Including market activity since this report was published several days ago, Financials has now outperformed the S&P 500 by 3% since our June 1st overweight and Industrials has underperformed the S&P 500 by 4% since our March 30th underweight.
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