2 ETFs On My Watchlist As Bears Make A Comeback
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ETF Trade Watch
The market made another gap lower pre-market Friday on the back of yet another hot inflation report. All three of the major indexes dropped by more than 1%, quashing any hopes that the bull rally would continue. The core personal consumption expenditures price index rose .6% in January and 4.7% from the prior year, and more than some economists predicted. This means there are two sectors in particular that I’m going to watch.
SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
The first would be to look at energy names like the XOP. This ETF had itself a 3% day yesterday and with the market falling, I am looking for the energy sector to rise, or at the very least, remain steady for a possible long play in the future.
The individual names from this sector ETF would be companies, such as Exxon Mobil (XOM), Marathon Petroleum (MPC), and Valero Energy (VLO). These names see good liquidity for individual stocks in this sector, so they are stocks I like to keep an eye on throughout the session. This sector could follow the rest of the market as the price of oil hasn’t shown much strength as of recent, but this leg lower could help energize the sector.
Communication Services Select Sector SPDR Fund (XLC)
Following the inflation report, the Tech and Communication Services Sectors led the market lower as investors flee from these high risk names. This move lower now appears to be confirming the formation of another downtrend.
Stocks leading this sector lower are names like Meta Platforms (META), which is down nearly 2% on the day, as well as Google (GOOGL), down nearly 1.5%. As investors take in another bad economic report, higher risk stocks are becoming less palatable, especially in a high rate environment. Keep an eye on this sector if the market continues downward.
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