After the debacles within the financial sector earlier this year, financial exchange traded funds (ETFs) are finally allowed a small respite. It’s been a tough year: the collapse of several major investment banks and big woes for insurers, which led to the need for a bailout package. Is there a sign of any recovery or healing?
According to VIX and More, financials, homebuilders and consumer discretionary stocks and funds can be used as a gauge of the health of the economy.
In the last few weeks, financials have been the most consistently strong sector, VIX and More says. The Financial Select Sector SPDR (XLF) is down 52.9% year-to-date, but is now 45.6% above the market’s Nov. 20 low.
Insurance and capital markets are enjoying some impressive gains since the November lows, as well. One insurance ETF, SPDR KWB Insurance (KIE), is currently down 50.4% year-to-date, but is up 43% off the market low.
Regional banks and one related ETF, SPDR KBW Regional Banking (KRE), has been acting more lethargic lately. This financial sub-sector enjoyed a measure of immunity from the collapse for much of this year. However, because it wasn’t as badly beat up as other areas in this sector, its recent performance may not have the “wow” recovery factor that the others might. It’s down 20.8% year-to-date and up 20.1% since the market low. It should be noted that this fund is just a hair below its 50-day moving average – closer than some of the other financial sector funds.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.