The Deep Dive

Industry-level ETFs

Good morning,

As promised yesterday, this week we are reviewing industry-level ETFs, or ETFs with a focus below the traditional sector level. Many of the 11 sector relative trends come out close to neutral on our time horizon, either due to improvement within a poor long-term trend, or the leaders from 2022 rolling over this year.

However, we can find more opportunities to add value, either by overweighting or underweighting, the deeper we go. Today’s report provides a technical update on some of the most popular industry-level ETFs and where they stand.

Let’s dive in!

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Materials

XME: Metals and Mining

Metals and mining is a clear market leader and the strongest area within materials. XME is closing in on both its absolute and relative highs from last May. Steel stocks within its holdings act especially well.

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Industrials

PAVE: Infrastructure

PAVE broke out from a 15-month base last week and is making 52-week relative highs as well. Just a great-looking chart.

ITA: Aerospace and Defense

ITA is a holding in the Beat the S&P 500 model and has broken out and retested its highs from 2021-2022. The only thing left to call resistance is the pre-Covid highs at $120.

IYT: Transports

Trucking, railroads, and airlines act great, but IYT has been held back by an 18% position in UPS. It recently hit 11-month relative highs, but the magnitude of outperformance is pretty small.

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Information Technology