Always consider hidden risks
SP500 Index:  No SPexit, All Defense?
 July 7 2016 ( From TradingView )
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The Situation

​​We just start to realize how deep the correction at the beginning of the year
​was on the ​​​US equity market: On the low made on January 20 2016 at 181.02
​on the SP500 Index (SPY ETF), even if few realize that the SPY ETF ​now
​trade ​well above that level (209.66 as of July 1). ​(See first chart
Rebounding from those abyssmal technical levels was quite a statement
​from Mr Market in January 2016 and February as a double bottom emerged
​and since then we keep making Monthly higher highs and higher ​lows for
the Mighty SP500 Index. (See first chart below)

But few of us realize that the the post-Brexit panic was in fact an opportunity
for portfolio managers to rebalance at the end of month/quarter from cash
​and bonds to stocks. Also,the relative flight to quality and liquidity was in
​strong favor of US Equities​​ and shows how resilient the Mighty SPY ETF is.

Some technical indicators and statistics:
1) SPY ETF is at only 1.9% from its peak reached on May 20 2015.​
​​( See first chart below )​
​2) SPY ETF is now testing the Major Daily Resistance Trendline that started back on May 2015. ​​​
( See first chart below - Thick Red Trendline )
3) SPY ETF closed near the Daily Resistance Trendline from a Downward Channel that started back on June 8 2016. ​​​​(See first chart below - Downward Channel - Ellipse)​

All that is bringing back the big picture: observation is that the SP500 performance pre-Brexit (June 23) and post-Brexit (June 27)  is quite interesting if we look which sectors did performed well and which one did poorly since those dates.

​​Since June 23, SPY performance is -0.54% and +5.04% since June 27 close.
As shown by the second chart below, the top 3 best ETF sector performance since June 23 are:
XLU Utilities, XLV Health Care and XLP Consumer Staples. All those 3 sectors are recognized as Defensive play within the broad investment selection by portfolio managers.

​​As shown by the second chart below, the top 3 worst  ETF sector performance since June 23 are:
XLF Financials, XLB Materials and XLE Energy. All those 3 sectors are recognized as Aggressive play within the broad investment selection by portfolio managers.

And almost the same in terms of sector performance classification since the post-Brexit date of June 27​​ as shown by the third chart below.

Quite interesting also to note that since June 23, 2 sectors ETF made an all time high ever in price:​​
XLU Utilites and XLP Consumer Staples.

My point is that those sectors who did well are defensive plays and mostly dividend yield plays. As we reached the lowest yield ever on the Treasury 10 year this week, not surprising that in fact the Mighty SPY performance is all coming from those interest sensitive sectors.

As also the SPLV ETF​​ (SPLV - PowerShares S&P 500 Low Volatility Portfolio) reached a new high ever on July 6 2016 and keep outperforming tremendously the SPHB ETF (SPHB - PowerShares S&P 500 High Beta Portfolio), another quite cautious move by the market, we must realize like playing a sport game; I better win with a strong offensive than win with a strong defensive. The market is telling us something here, do we get the message?


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"To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting."

-Sun Tzu, the Art of War

SP500 Index: No SPexit, All Defense? $SPY #investing #trading #SP500 #stocks #spy

 Major SP500 Sector ETF
Performance from June 23 2016 in %

Chart source:
SP500 Index ( SPY ETF - Daily Candles )

 ​Major SP500 Sector ETF
Performance since June 23 2016 in %

Chart source: