Monday, July 15, 2013

XLF Model Update..7.15.17

Here's an update on the XLF component model and, surprisingl,y a top 6 sort actually is underperforming the XLF basket of all 11 ETFs. 
One conclusion to be drawn from these metrics is that the whole ETF is in an accumulation mode, although apparently on a rotating basis. 
Based on XLFs recent slot as #4 or #5 we can see that there is a risk adjusted advantage to using a somewhat wider net (top 6) than our typical focus on top 2 models.  Part of this strategy may be traced to the fact that these are stocks, not ETFs, which inherently possess considerably higher volatility than the underlying XLF.
The larger conclusion is that the sector is exhibiting robust momentum, (boosted today by a rosy Citigroup earnings report) and supporting our previous contention that XLF's next move could be significant.
Click once on chart to clarify.