Exchange traded funds tracking the technology and financial sectors are powering the stock rally as the blue-chip S&P 500 breaks through the 1400 level.
Equities have been rising since the Federal Reserve announcement last week. The S&P 500 closed on Friday at 1404.17 and is above 1400 for the first time since 2008.
According to our market technician David Chojnacki, a former resistance level, SPX 1375, now provides near term support, while he sees mild resistance at 1412 but is leaning towards us testing SPX 1425. Going back to the early part of 2012 we noted the relative strength and leadership of both Technology and Financials, and both sectors continued to lead the way last week.
The NDX (Nasdaq 100) closed above 2700, and this level as well as NDX 2675 look to be near term support levels.
Apple (NasdaqGS: AAPL), the largest weighting in the NDX at about 15%, briefly eclipsed $600 last week before giving up some gains to close the week at $585.57. The company announced a dividend and share buyback plan on Monday. [Nasdaq-100 ETF Higher on Apple Dividend]
Trading volume in Financial Select Sector SPDR (NYSEArca: XLF) was abnormally high throughout last week, and the ETF spiked to its highest levels since last spring.
Top holdings in XLF including JPM and WFC literally gapped higher the day of the Fed FOMC announcement (Tuesday), and never looked back. On that note, XLF was the second biggest recipient of asset inflows last week in the ETF universe, with the fund taking in over $600 million in new assets via creations.
Other sector based equity ETFs were also active last week as XLP, XLY, and XLE took in about $800 million in new assets collectively. The leader in inflows in all ETFs was SPY taking in a lofty $9 billion last week as it appears that institutional managers that are under-allocated to stocks began to throw in the towel last week and at least grab for benchmark index exposure via S&P 500 tracking ETFs.