Further bolstering the case for XLY and rival ETFs from a fundamental perspective is dividend growth within the discretionary sector. The sector, along with technology and financial services, has been one of the leading sources of S&P 500 dividend growth over the past several years.  [Ahead of Fed, Consider Discretionary ETFs]

As for the technical side of things, Coe had this to say about XLY: “With the fund not being overbought, evident from the 14-day RSI rising through neutral, a breakout to new all-time highs is likely in the sessions ahead. It’s our favorite sector, as demonstrated by the high allocation in our portfolio; further outperformance expected.”

Consumer Discretionary Select SPDR

ETF Trends editorial team contributed to this post.