We have to point out that it was clearly a shortened week, as the markets were closed on Monday and Tuesday due to the unfortunate wrath and effects of Hurricane Sandy on the east coast. Our thoughts and prayers go out to all of those affected, as it forces all of us to take a step back and look at priorities in our own personal lives outside of “the markets.”
This aside, being that it was only a 3 trading session week, we saw sizable inflows late last week enacted by one large institutional manager (buying IJH, IEI, IWM in size), and some interesting flows in XLF (Financials) as well.
In fact, in addition to the creation activity that occurred in the ETF itself, buyers of custom 16 strike November 9th expiration calls were around last week in decent size. Based on the custom nature of these options and surrounding the anticipated U.S. Presidential elections next week, we can draw no other conclusion outside of “this is some sort of election play.”
Financials continue to exhibit impressive relative strength against the broad market, with XLF up 22.92% YTD versus the S&P 500 Index rallying 12.80%. In the trailing one month period, the story is still good as XLF is up 1.85%, despite the recent market turmoil, with the S&P 500 faltering 2.02% during this time frame. We also saw late week interest in upside calls in WTI Crude Oil futures, as well as similar looking flows in Oil linked ETF/ETNs (USO, USL, BNO, OIL, etc.) but we have not seen a huge amount of dollar flows yet in the space (likely a play on rising crude prices following the Hurricane, but we stand by to see if the trend holds).
Top Asset INFLOWS (Creations) Notables (based on IndexUniverse.com data):
#1 SPY (SPDR S&P 500) $1.72 billion #2 IJH (iShares Core S&P Midcap) >$900 million #3 IEI (iShares 3-7 Year Treasury Bond) >$830 million #4 IWM (iShares Russell 2000) >$300 million #5 XLF (SPDR Financials) >$200 million
In another ugly session on a Friday where #1 weighting in the NDX, Apple (AAPL) floundered more than 3% and closed at a multi-month low, even plunging below its 200 day moving average, the stock closed at 576.80 versus 200 day MA of 588.63.
These “Apple Fridays” are becoming increasingly common in the past quarter, and we doubt that market participants have really come to grips yet with the fact that AAPL still remains a massive 19.74% weighting in the NDX, as well as being the top weighted holding in the SPX at 4.83% (the next highest weighting is XOM at 3.26%).