What Consumer ETFs are Saying About the Market’s Strength | ETF Trends

An exchange traded fund indexed to the consumer discretionary sector is lingering near an all-time high and outperforming the S&P 500, which are good technical signs for the overall market.

Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is up 17.7% year to date, while SPDR S&P 500 (NYSEArca: SPY) has gained 11.4%, according to investment researcher Morningstar.

“The low-cost, highly liquid ETF, which owns 81 companies, is fairly concentrated and owns a variety of names that are tied to consumer spending, including retail companies, restaurants, media companies, apparel and luxury goods companies, automobile manufacturers, and leisure firms,” according to an analyst report on the fund.

“Before investing, however, investors should have a strong view on the macroeconomic climate,” Morningstar adds. “Investors should take note that the Consumer Discretionary Select Sector SPDR is a cyclical play tied to consumer spending.”

The relative chart of XLY versus the S&P 500 is also making new all-time highs, says Investors Intelligence technical analyst Tarquin Coe.