Conclusion, Investment Implications, Strategy

The SPDR S&P Insurance ETF (KIE) is in the midst of minor and major bullish trends that were initiated in October 2022, amid Strategic relative outperformance versus the benchmark S&P 500 (SPY) and monthly expansion in assets.  These three factors (positive trend, relative outperformance, expanding investor assets ) indicate favorable conditions for KIE to continue rising in the weeks and potentially months ahead.

Current Sector & Industry Group Ideas

Table 1 below is an updated version of Table 2 that appears in our weekly Keys To This Week: Sector & Industry Groups report, published on Monday mornings.

This table is also accessible via the Sector & Industry Group Ideas rectangle at the top of the Research Center.

Analysis and Rationale

In seeking to track the performance of the S&P Insurance Select Industry Index (the “index”), the SPDR S&P Insurance ETF (KIE) 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 upper panel of Chart 1 below plots the SPDR S&P Insurance ETF (KIE) daily since October along with its 50- and 200-day moving averages, widely-watched minor and major trend proxies.  The lower panel plots the corresponding daily relative performance of KIE 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 upper panel shows that KIE has been above its 200- and 50-day moving averages since October to indicate positive minor and major trends, and that these trends were tested and successfully held on Dec 19th.  The lower panel shows that KIE appears to be resuming its October 2022 trend of Strategic, quarterly relative outperformance versus the S&P 500 (SPY).

The lower panel of Chart 2 below plots the daily total net assets invested in KIE since October along with their 21-day moving average, which we use to identify a monthly trend of expansion or contraction.  The green arrow points out that these assets appear to be resuming their October 2022 trend of monthly expansion following months of sideways, directionless movement.  Expanding assets are the fuel that drives a positive price trend.

Chart 2

As long as these positive factors — trend, relative performance, and asset flows — remain intact, KIE is likely to continue rising in the weeks and potentially months ahead.