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Sector Analysis: Confirming Trends Using Equal Weighted ETF's - Week Ending Feb 10, 2017.

|Includes: XLB, XLE, Financial Select Sector SPDR ETF (XLF), XLI, XLK, XLP, XLU, XLV, XLY

Weekly Sector Recap

It was a bullish finish last week. Three of the four economically-sensitive (aka aggressive) sectors finished in the top three slots - Industrials, Cyclicals, and Technology (the four aggressive sectors are highlighted in the chart). Financials was the only aggressive sector to finish behind the S&P 500 benchmark…

The surge came late in the week. The next chart is the SPDR Sector performance for Monday thru Wednesday (Feb. 6 th - 8 th). It looked more like a risk-off, defensive-posture carryover from the prior week with Utilities and Staples leading…

Then the week finished with a bang. This after President Trump announced Thursday he would be releasing details (soon) regarding his "phenomenal" tax reform. Financials saw the biggest turnaround, while the other three aggressive sectors tacked on to their weekly gains…

Confirming Sector Trends Using Equal Weighted ETF's

The nine SPDR Sector ETF's are capitalization weighted. The top ten holdings in each typically make up a majority of the weighting. This can sometimes misrepresent (skew) the absolute performance within a SPDR Sector.

For example, Amazon (NASDAQ:AMZN) is a top-ten holding of the Consumer Discretionary SPDR (NYSEARCA:XLY). It represents 13.42% of the SPDR ETF's total weighting. As you can imagine Amazon's performance is going to have a large influence on the SPDR ETF's total performance.

Equal-weighted sector ETF's can be used to validate the overall strength (or weakness) of the SPDR ETF's. Guggenheim has a corresponding set of the nine core sector ETF's. These are equal-weighted versions of the SPDR sector ETF's. For example, Amazon only represents a 1.35% weighting in the Guggenheim Consumer Discretionary ETF (NYSEARCA:RCD).

The nine corresponding Guggenheim ETF's are charted below for the previous week. The trading symbols for both the Guggenheim and SPDR ETF's are listed in the chart for cross reference. The weekly performance of the Guggenheim ETF's corroborates the bullishness seen in the four economically-sensitive SPDR Sectors.

Note: The Guggenheim ETF's are best used as a reference versus a trading or investment vehicle. This is due to their lower liquidity (volume) as compared to their corresponding SDPR components.

Thanks for the read…

Previous Instablog's for Reference:

Sector Analysis: Defensive Posturing Or February Consolidation? - Week Ending Feb 3, 2017.

Sector Analysis: Materials Sector Finishes Strong & February Sector Preview - Week Ending Jan 27, 2017.

Sector Analysis: Cyclicals And The Transportation Index Say Stay Long- Week Ending Jan 20, 2017. Sector Analysis: Bullish Sentiment Is Still Alive And Well - Week Ending Jan 13, 2017.

Sector Analysis: Defensive Sectors Are Relative Leaders Entering 2017 - Week Ending Dec 30, 2016.

Sector Analysis: Is Defensive Posturing Starting To Develop? - Week Ending Dec. 23, 2016.

Sector Analysis: Trump Rally Extended & Cyclicals Sector Raising Caution Flag- Week Ending Dec. 16, 2016.

Sector Analysis: Trump Rally Resumes With Seasonality Tailwinds- Week Ending Dec 9, 2016.

Sector Analysis: Trump Rally Takes A Breather - Week Ending Dec 2, 2016.

Sector Analysis: The Trump Rally Was Telegraphed By The Transports - Week Ending Nov. 25, 2016.

Sector Analysis: Dow Transports Telegraphing Strength - Week Ending Nov. 4, 2016.

Disclosure: I am/we are long XLI.