“Firms in the sector have become leaner in the years since the financial crisis, although we question the big uptick in margins implied by consensus estimates for 2015-16, especially as savings at the gas pump aren’t being spent elsewhere, and estimates continue to drift lower. Valuation multiples have traded in a fairly narrow range over the past year — see the P/E ratio — but the sector remains richly valued versus the S&P500 in our opinion,” according to AltaVista.
Investors have added $261.3 million to XLY this year, but the fund still faces technical challenges.
“It is looking vulnerable at least near term. Last Friday, XLY found support at its 50-day moving average (76.18). Odds favor it loses that. There are some early signs of market participants preferring risk-off at the moment. Demand for VIX (Volatility Index) calls in June and July expirations – former in particular – has shot up; and of late in the futures market, June has seen a faster rise in price,” according to See It Market.
Consumer Discretionary Select Sector SPDR
