Sector Rotation – Weekly ETF Fund Flows
Today we’re taking a look at ETF fund flows in – SPDR S&P 500 (SPY), Health Care Select SPDR (XLV), and Consumer Staples Select SPDR (XLP).
ETF fund flows are a valuable indicator of what traders are thinking. It takes a lot of buying or selling to drive millions of dollars into or out of individual ETFs.
They’re something traders use to find trends and gauge investor sentiment. And it can help you pinpoint which ETFs could be next to make a big move higher or lower.
Let’s take a look at three ETFs that led the way in net inflows and net outflows from May 6th to May 10th.
SPDR S&P 500 (SPY) had the most inflows last week. It’s not surprising to see SPY at the top of this list. After all, it is the largest ETF with $137 billion in assets under management.
Nevertheless, SPY’s weekly inflows of more than $6 billion were impressive.
It’s no secret the S&P 500 is at an all-time high. SPY is currently trading for $163.38. The large cap index has extended its gains to a whopping 15% gain so far this year.
Needless to say, the massive inflow of new money into SPY, when it’s already at an all-time high, is bullish. But nearly half of all Americans aren’t benefiting from the skyrocketing stock market.
According to a Gallup poll, the percentage of US adults invested in the stock market has fallen to 52% – that’s the lowest level since they began tracking the data in 1998. And well below the peak of 65% in 2007.
There’s no telling how high SPY could climb if another 15% of Americans get back into stocks…
What’s more, the ETFs with the most outflows add fuel to the bulls’ fire…
Last week the Health Care Select SPDR (XLV) and Consumer Staples Select SPDR (XLP) led the outflows with $1 billion and $773 million respectively.
These outflows smack of one thing… sector rotation.
As you know, defensive sectors like healthcare and consumer staples have been leading the markets higher this year. But in order for stocks to take the next leg higher, we need cyclical stocks to take over the market leadership.
The outflow from XLV and XLP and inflow into SPY indicates investors are rotating money out of defensive stocks and into cyclical stocks. And it could be just the thing to keep the stock market going.
That wraps up this week’s ETF fund flows…
Keep in mind, there’s a lot of information about ETF fund flows. And it can be a very useful tool as long as you know what you’re looking for.
Good Investing,
Corey Williams
Category: ETFs, Index ETFs, Market Analysis, What's Going On?
