Like Columbus, if anyone out there had been fortunate enough to take the month of September to sail the world, imagine their reaction when they checked the market. From the S&P 500 setting new highs in late August to being within spitting distance of its 200 day moving average after having broken the 2012/2013 uptrend pattern in just five weeks - the tenor of the market has changed dramatically. But even in these times, a few sectors have managed to stand out as the large cap indices begin to feel the pain inflicted on their small and mid-cap brethren.
We may only be eight trading days into October, but a full swing back into the defensive sectors that dominated the first quarter has begun. Since October 1st through the 10th, the Utilities Select Sector SPDR Fund (XLU) is up over 2% while Consumer Staples Select Sector SPDR Fund (XLP) is up 1.1% compared to the S&P 500 off 3.35% in the fourth quarter. If you re-sort ETFG Quant on the latest technical scores, 9 of the 10 ETF’s on the list are classified as either consumer staples or utilities.
Before you get your buy orders ready, remember that improving momentum doesn’t necessarily mean positive performance, just better than their recent history. Utilities continue to be putting the most points on the board with the Deutsche X-trackers Regulated Utilities ETF (UTLT) up 2.76%, thus far in the fourth quarter with its overall behavioral score going from 48.09 on October 8th to 63.37 on October 10th.
But if you prefer to keep things simple and see ETFs as an asset class, head over to Indices and review the ETFG Global Consumer Discretionary Index which managed a positive .32% on Friday compared to -1.14% for the S&P 500 while the ETFG Global Utilities Index did even better with a positive .43% to bring it to a 12.32% return YTD. If you are curious as to how the Global Consumer Staples Index differs from Consumer Discretionary, note that it has a larger base of ETFs to draw from both offering more specialized domestic exposure (home builder stocks for example) and internationally, for example the Global X China Consumer ETF (CHIQ) that can act as a drag when domestic equities are clearly king.
With Asian equities heading lower and dragging S&P futures with it. If nothing else, this week should be interesting.