Among traditional market capitalization-weighted sector exchange traded funds, utilities funds are leading the way this year.
Looking at the nine sector SPDRs, investors will see the Utilities Select Sector SPDR (NYSEArca: XLU) is running away from rival sector ETFs in a sign that investors are displaying a preference for conservative sector fare. Including dividends, XLU is up 10% this year, an advantage of 440 basis points over the second place Health Care Select Sector SPDR (NYSEArca: XLV). [Utilities ETFs Flex Their Muscles]
In further confirmation that investors are eschewing riskier sector bets, the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is the only one of the nine SPDR ETFs that is in the red year-to-date. Remember that XLY has been a sector ETF lead for much of the past three years. Over that time, XLV is the only SPDR that has outperformed XLY.
The discretionary sector’s near-term outlook is not encouraging, at least not from a technical perspective. It is the only one of the 10 S&P 500 sectors currently residing below its 50-day moving average notes technical analyst Andrew Thrasher.
“In early March we saw the consumer discretionary sector put in a false break above its January high. Buyers were unable to maintain control as XLY retreated back under $66 and continued to weaken from there. With the false break we saw a host of negative divergences take place. First, in the top panel of the chart below, we have the Relative Strength Index (RSI) which put in a lower high, a bearish divergence,” writes Thrasher.