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US Market Sectors: Updating Our Asset Flow Metric

|Includes: SPY, XLB, Energy Select Sector SPDR ETF (XLE), XLF, XLI, XLK, XLU, XLV

The following is an excerpt from the US Stock Market Sectors section of our April 21st Keys To This Week report.

The report also covers the US Stock Market, US Interest Rates, the US Dollar, and economically influential commodities like copper, gold and crude oil, providing an intermediate term macro outlook for the US financial landscape that includes tactical investment ideas.

US Stock Market Sectors

Table 2 below shows that the sector with the biggest inflows of investor assets over the past week, the past month, and the past 3 months has been Energy, which has fueled the Energy Sector SPDR ETF (NYSEARCA:XLE) outperforming the S&P 500 SPDR ETF (NYSEARCA:SPY) by 7% since March 5th.The table also shows that the sector with the biggest outflows of investor assets over the past week and the past month has been Health Care, which has triggered the Health Care Sector ETF's (NYSEARCA:XLV) 5% of relative underperformance versus the S&P 500 SPDR ETF (SPY) since March 4th.

Table 2

Sector Table: Table 3 below lists our current market calls for relative outperformance (green background), relative underperformance (red background),and market performance (blue background) versus the S&P 500, and includes any newly closed-out existing market calls (gray background) in the 9 sectors of the S&P 500 as represented by the Select Sector SPDR ETFs. The table includes the date that we initiated the call, relative sector performance since then, and in the rightmost column Asbury's performance relative to the direction of the call.

Table 3

This Week our trend model retains an overweight bias in Energy (March 3rd), Utilities (February 3rd), and Materials (January 21st), and an underweight bias in Financials (April 14th), Health Care (March 24th), Technology (March 10th), and Industrials (March 3rd).Chart 6 below displays the current distribution of investor assets in the 9 Sector SPDR ETFs on Thursday April 17th. The colored highlights identify the most under-invested and over-invested sectors based on their historic daily average distribution of investors assets since April 2006.

Chart 6

The green highlights show that the two most under-invested sectors are currently Energy, at just 13% of the sector pie versus 20% historically, and Utilities, at 7% of the sector pie versus 11% historically. The most over-invested sector is Industrials, currently at 11% of the sector pie versus 7% historically.The lower panel of Chart 7 below shows that the percentage of ETF sector bets allocated to Energy expanded to 12.8% at the end of last week, from just 9.5% on February 19th.

Chart 7

The green highlights in the upper panel show that the Energy Sector SPDR ETF (XLE) has outperformed the S&P 500 SPDR ETF (SPY) by 7% between March 20th and April 17th, fueled by this aggressive influx of investor assets from historically under-invested extremes.As long as the "slice of the sector pie" that Energy comprises continues to expand, the Energy Sector is likely to continue outperforming the US broad market.


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