Technology and Financial Sector Analysis Report For The Week Starting 5/25/20
Many are wondering if the bear market will continue or have we seen the bottom in the bear market. There is probably no better clue than analyzing the S&P 500, but in particular the Technology and Financial Sector within the S&P 500.
The Standard & Poor's 500 Index (known commonly as the S&P 500) is an index with 500 of the top companies in the U.S. Stocks. Because the S&P 500 Index represents approximately 80% of the total value of the U.S. stock market, it’s the bellwether index for the U.S. stock market.
The U.S. stock market is the largest stock market in the world, it’s also the bellweather for equity markets around the world. The S&P 500 is arguably the most important stock market index on the planet.
The ETF, SPY represents the bellweather, the S&P 500 Index, which is a diversified large cap U.S. index that holds companies across all eleven sectors. One sector represented with a significant weighting is information technology.
The S&P 500 is a market capitalization-weighted index. The weight of a sector in the index is equal to the market cap of that sector divided by the total market cap of all the sectors.
The ETF, SPY represents the bellweather, the S&P 500 Index, which is a diversified large cap U.S. index that holds companies across all eleven sectors. The top two sectors in the SPY is technology (30%) and Financials (15%) which make up almost 50% of the SPY.
Regarding the XLK, the top holdings in the XLK are
Hedge funds concentrated their portfolios even further into growth stocks including Amazon.com Inc and Microsoft Corp in the first quarter of 2020 as the COVID-19 pandemic pummeled U.S. markets, Goldman Sachs analysts said in a report.
The two American multinationals saw the largest increase in hedge fund holdings, according to an analysis by the bank of 822 funds with 1.8 trillion in gross equity positions.
Along with Facebook Inc, Alphabet Inc’s Google and China’s Alibaba, they have been hedge funds’ top five long positions for seven consecutive quarters, the report said.
Price hit the daily supply a litle over a week ago and dropped $6, but gapped back and breached into the supply zone.
So the level I'm watching is the daily demand at $95.
Regarding the XLF, the top holdings are
Last Monday, Moderna announced positive data on their COVID-19 vaccine candidate. They reported that eight patients in a phase one trial developed antibodies at levels similar to those who recovered from COVID-19. That day, financial sector was among the market's best performers. In particular, Wells Fargo and Citigroug were the leaders were up 9% with Bank of America and JPMorgan Chase posting gains of more than 7% and 6%, respectively. However, the remainder of the week, price traded sideways.
The $20.50 daily demand remains the level I continue to watch as price deeply penetrated the zone and price action showing further downside risk now if price re-enters the zone.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
