Conclusion, Investment Implications, Strategy

The SPDR S&P Insurance ETF (KIE) is resuming its November 2020 Strategic advance amid recent relative outperformance versus the S&P 500. A sustained rise above the 39.79 area would confirm this and target an additional 12% rise to 45.00.  This is an Asbury Momentum trade idea.

Analysis and Rationale

The SPDR S&P Insurance ETF (KIE) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of an index that tracks the performance of publicly traded companies in the insurance industry. In seeking to track the performance of the S&P Insurance Select Industry Index (the “index”), the fund employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index represents the insurance segment of the S&P Total Market Index (“S&P TMI”).

The rightmost green highlights in the upper panel of Chart 1 below point out that KIE appears to be resuming its larger November 2020 Strategic (quarterly) advance by rising this morning above 5 months of sideways investor indecision.  The green highlights in the lower panel show that KIE has also been outperforming the benchmark S&P 500 the SPDR S&P 500 ETF Trust (SPY) on a Strategic basis since Sep 29th.  A sustained rise above the upper boundary of the indecision area, currently situated at 39.79, would confirm this and target an additional 12% rise to 45.00.

Also note that the Insurance Industry Group is a subset of the Financial Sector, which our SEAF Model shifted to a buy/overweight bias on as of this past weekend.

Chart 1

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the 38.92 area, a long entry price of 40.32 would provide a 1:3.3 risk/reward ratio (risking $1.00 to make $3.30) with an initial risk of 3.5%.

Table 1

Click Here for a table containing all of our current stock, ETF and index ideas.

Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.