Notably, AAPL has a sizable 17.98% weighting in the Nasdaq 100 Index, and it is also the largest weighting in the S&P 500 Index (both indexes are calculated using a market capitalization weighting metric) at 4.54%. We have pointed out throughout this year that AAPL, and the technology sector along with it, have consistently outpaced the broad markets in 2012 although they both did stumble in recent months. Currently, AAPL has rallied 41.75% YTD while the Nasdaq 100 is up 12.82% and the S&P 500 has increased 6.84%. From a technical standpoint, the NDX closed well above recent resistance at 2550 (last Friday’s close was at 2571.23), and it will likely challenge its 50 day moving average in the near term.
Interestingly however, despite the obvious reinstatement in appetite for Large Cap broad based equity index ETFs last week, we did see net inflows in a number of sector equity ETFs that are typically considered “defensive.” XLU (SPDR Utilities), XLP (SPDR Consumer Staples), and XLY (SPDR Consumer Discretionary) collectively brought in about $1 billion in new assets via creation activity. Elsewhere, we also saw net inflows in a number of fixed income products last week, including CIU (iShares Barclays Intermediate Credit Bond, LQD (iShares Investment Grade Corporate Bond), and CSJ (iShares Barclays 1-3 Year Credit Bond), with collective flows of approximately $1.5 billion, which to us reflects institutional caution towards equities still, even with the recent broad move higher. From an outflows standpoint, net flows were simply not substantial compared to the inflows side of the equation.
The largest outflows occurred in FXI (iShares China), which lost about $300 million, but compared to the approximately $10 billion that collectively flowed into both SPY and QQQ last week, it was clear that appetite for equities on the long side increased going into the weekend.
Both the NDX and SPX will likely eclipse their 50 day moving averages early in this week on reciprocal strength in equities stemming from the news in Europe from this weekend’s vote, and it will pivotal for the markets if this upward momentum can continue to challenge levels that have not been seen since the early May fallout that occurred across markets. Our eyes will be fixed on the specific sectors and leaders that brought the markets to their highs of 2012 back in early April and early May, which as mentioned earlier is focused on Technology (which is hard to ignore given the heft of AAPL’s weighting in the index and the stock’s refusal to call it quits – despite the market turmoil throughout May and part of June, the stock is only 10% off of its all time high).
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