Sector ETFs tracking consumer discretionary and retail stocks continue to log new record highs as investors position for a recovering economy.
Meanwhile, the relative strength of these ETFs relative to the overall market is a positive sign for the rally in U.S. equities.
“Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) made new all-time price and relative highs on Friday. Today is seeing a healthy pullback following last week’s strength,” said Investors Intelligence technical analyst Tarquin Coe in a note Monday. [Retail ETFs Rally on Heavy Volume]
“The fact that this area continues to break higher is a sign that the overall market is not yet ripe for a correction. If a top was at hand then this area would be printing a bearish relative divergence,” he added.
The S&P 500 continues to wrestle with the key 1,500 mark as the bulls hope for a breakout above the all-time high from 2007.
For the trailing 12 months, the consumer discretionary fund XLY is up 24.5% compared with a gain of 15.9% for SPDR S&P 500 ETF (NYSEArca: SPY), according to Morningstar.
Consumer Discretionary Select Sector SPDR
Full disclosure: Tom Lydon’s clients own SPY.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.