BY MARK SEBASTIAN
December 07, 2023
Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.
Have a stock YOU want us to review? Email my team here. – Mark
Hey Traders,
This week we are taking a look at the broad market index known as the S&P 500…more specifically SPY, the etf that tracks the S&P 500.
The ETF has had a RUN over the last year…after a very tough 2022
It is now sitting at year highs…as we head into December and the end of the year it is time to look toward 2024 and what it might do….
SPY is made over 11 sector indexes:
Technology: XLK
Health Care XLV
Financial XLF
Real Estate XLRE
Energy: XLE
Materials: XLB
Consumer Discretionary: XLY
Industrials: XLI
Utilities: XLU
Consumer Staples: XLP
Communications XLC
Here is what these indexes look like on a returns chart:
It’s hard not to see the index has been led by 3 ETFS, XLK up over 40%, XLC up over 38% and XLY up 22.5%.
Those are the ETFS that are beating the SPY…XLI is closely tracking the ETF…the rest….flat or down…That’s right an ETF that comprises 11 sectors and is up 15.47% on the year is being pulled higher by 3 ETFS.
If the index is going to keep going the rest are going to have to pick up the pace … .I do not see the same upside in XLK, XLC, and XLY in 2024..
I do not see XLU being a big leader…when have utilities EVER been a big leader, there is also not any huge companies in that sector…but a pick up in XLE and XLP could certainly help drive the index higher….there are huge companies in those ETFs like XOM, CVX and PG.
This is a chart of the S&P 500 PE multiple
It’s high…in the long run…SPY is going to go up…but near term…
The ETF is overbought and probably should be sold…Ill leave it Licia to confirm.
However, if you don’t want to worry about when to buy or when to sell…you should check out the session Andrew and I had on Wednesday night. In it we walked through a strategy that can produce consistent returns, and has downside protection if the market tanks …you’ll be glad you spent the time because the session was REALLY good.
Click here to watch the replay.
Questions about that? Leave a comment below!
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Mark Sebastian
Mark Sebastian
Founder & CEO, Option Pit
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CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
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