Don't Fight The Trend: Sell The XLY

Hale Stewart profile picture
Hale Stewart
10.53K Followers

Summary

  • The macroeconomic backdrop is positive.
  • The XLY is one of the worst performing ETFs across multiple time frames.
  • The chart is moving lower.

Asian chinese female boutique shop clothing store owner checking stock with digital tablet

Edwin Tan/E+ via Getty Images

Investment thesis: despite a strong economic backdrop, the ETF is moving lower. It's time to take profit.

ETFs now form the backbone of most portfolios. For example, a standard portfolio is composed some ratio of

XLY industry allocation

XLY industry allocation (SSGA)

10 largest holdings of the XLY

10 largest holdings of the XLY (SSGA)

Payroll employment and unemployment rate

Payroll employment and unemployment rate (FRED)

Personal income less transfer payments and Y/Y change in average hourly income

Personal income less transfer payments and Y/Y change in average hourly income (FRED)

Y/Y percentage change in PCEs

Y/Y percentage change in PCEs (FRED)

Real retail sales

Real retail sales (FRED)

Relative rotation graph of the XLY versus the S&P 500

Relative rotation graph of the XLY versus the S&P 500 (Stockcharts)

Weekly and daily chart of the XLY

Weekly and daily chart of the XLY (FRED)

This article was written by

Hale Stewart profile picture
10.53K Followers
Hale Stewart spent 5 years as a bond broker in the late 1990s before returning to law school in the early 2000s. He is currently a tax lawyer in Houston, Texas. He has an LLM in domestic and international taxation (MagnaCumLaude). He is the author of the book The Lifetime Income Security Solution. Follow me on Twitter at @originalbonddadYou can read his legal analysis on his law office's blog.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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