Conclusion, Investment Implications, Strategy

The SPDR FactSet Innovative Technology ETF (XITK) is in the midst of a late January major uptrend amid quarterly relative outperformance versus the S&P 500 (SPY) and monthly asset expansion since mid May.  These three factors indicate favorable conditions for recent strength in XITK to continue.

 

Current Sector & Industry Group Ideas

Table 1 below is also accessible via the Sector & Industry Group Ideas rectangle at the top of the Research Center.

Table 1

Click the table to  make it larger

This table also regularly appears in our weekly Keys To This Week: Sector & Industry Groups report published on Monday mornings.

Analysis and Rationale

The SPDR FactSet Innovative Technology ETF (XITK) is designed to represent the performance of U.S.-listed stock and American Depository Receipts of Technology companies and Technology-related companies within the most innovative segments of the Technology sector and Electronic Media sub-sector of the Media sector as defined by FactSet Research Systems, Inc. The fund generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index.

The upper panel of Chart 1 below plots XITK daily since January along with its 200-day moving average, a widely-watched major trend proxy.  The lower panel plots the corresponding daily relative performance of XITK versus the SPDR S&P 500 ETF Trust (SPY) along with its 63-day moving average which we use to identify the Strategic (quarterly) trend of relative performance versus the broad market. 

Chart 1

The green highlights in the upper panel show that XITK is in the midst of a major uptrend relative to its 200-day moving average that began on Jan 23rd.  It also shows that XITK most recently broke out higher above formidable overhead resistance at 127.52, clearing the way for further gains.  The lower panel shows that XITK in the midst of a May 22nd trend of quarterly (our Strategic time frame) relative outperformance versus SPY.

The upper panel of Chart 2 below also plots XITK daily since January, this time with a corresponding chart of the daily total net assets invested in XITK and their 21-day moving average in the lower panel.  We use the moving average to identify a monthly (our Tactical time period) trend of expansion or contraction in these assets.  

Chart 2

The lower panel shows that these assets are currently in a May 15th trend of monthly expansion and that this trend is accelerating. Expanding assets indicate bullish conviction and are the fuel that drives a price trend.

The current combination of a positive major trend, quarterly relative outperformance versus the benchmark, and expanding assets establish favorable conditions for the current rise in XITK to continue.