XLRE Real Estate Sector SPDR July Outlook—YTD downtrend showing signs of weakening momentum
We expect more bad news is priced in than good and have taken a modest long position in XLRE for July in our Elev8 Sector Model Portfolio.
Sector Reports
XLC Communication Services SPDR July Outlook—META, GOOG/L and NFLX continue to pace the sector
The XLC continues to benefit from the lack of inflation and the strong bull trend behind Growth stocks. Entering July we see a continued positive environment for the sector.
XLK Information Technology Sector SPDR June Outlook—Strength in Semiconductor stocks and benign inflation readings keep XLK the long-term winner in this cycle
Semiconductors have led everything YTD, but other areas of the XLK are showing near-term improvement now as Semi’s have consolidated in over the past week. Price Action & Performance XLK was among the leadership cohort for the 2nd month in a row after a weak spot in March and April. Momentum made a bull market
XLF Financials SPDR Outlook—While still facing challenges, Financials are showing some signs of near-term stabilization
With inflation continuing to look a bit toothless, we are expecting XLF to regain some of its footing in July.
XLV Healthcare SPDR July Outlook—As the S&P 500 reconfirmed its uptrend in July, XLV reconfirmed its underperformance trend
The XLV lost ground by moving sideways in June, unable to entice investors who were looking to add risk instead. The price action has been sideways since XLV peaked in February, and with a weak start to July trading, the pattern is taking on a distributional look.
XLP Consumer Staples SPDR July Outlook—Softer inflation has shifted investor focus towards discounting a more dovish Fed. going forward. XLP is less likely to outperform while that behavior persists
Weaker inflation and a fairly bullish earning season from the Tech. Sector have put the XLP in the back seat. Several o our model inputs have deteriorated for the sector since May, and it now scores as a zero-weight sector for July in our work
XLY Consumer Discretionary Sector SPDR July Outlook—Discretionary stocks may have finally put in a durable low in June as investors shift views on Fed. policy expectations from hawkish to dovish
XLY has shown signs of bottoming as inflation has continued to dissipate. Investors are starting to gain conviction that the Fed. will be more accommodative to equities in its forward interest rate policy prescriptions as a flagging consumer and slowing industrial production have the potential to supplant inflation as a primary concern.
XLI Industrials SPDR July Outlook—Oversold conditions are at near-term wash out levels for XLI and we continue to be positioned for a bounce.
We are remaining long XLI as it is deeply oversold near-term and tactically attractive if we see profit taking from L/T winning sectors XLK and XLC
XLB Materials SPDR July Outlook—Weakness across the Commodities complex has had a negative effect on the Materials Sector and has us at a 0% allocation for July in our model
XLB has fallen to new lows without any signs of positive divergence or bullish reversal at the industry level.
XLE Energy SPDR July Outlook—Energy stocks and Crude have shown signs of bullish reversal in the 2nd half of June.
XLE is a preferrable exposure to XLB in our work and has triggered a tactical buy signal.