On August 12, 2021, we saw the SPDR S&P 500 ETF Trust (SPY) hit a new all-time high at $445 as major U.S. indexes continue to push higher despite uncertainty surrounding the pandemic, inflation fears, and geopolitical tensions, among other things. Recall that large-cap stocks struggled out of the gate this year; however, we have seen this area of the market rebound and strengthen, driven in part by the technology sector’s rebound. Year-to-date through August 13, 2021, the SPY has returned 19.94% on a total return basis (including reinvested dividends). While the SPY’s fresh high and double-digit year-to-date return is undoubtedly noteworthy, we also want to bring to your attention the fact that it has officially crossed the 100% total return milestone since bottoming in March 2020! While the journey to the 100% threshold has not felt so smooth, we find that it has been a relatively orderly run from a technical perspective.
From a sector view, the Materials sector represented by the (XLB) has had the most robust absolute performance since March 2020, with a return of 130%! Financials (XLF) was the second-best performing sector, up 127%, followed by Energy (XLE), Information Technology (XLK), and Industrials (XLI) to round out the top five strongest performing sectors since the March 23, 2020 market low. The worst performing sector was Consumer Staples (XLP), which advanced only 54.25% over the same period.
Since returning to a technical buy signal at $250 on March 25, 2020, the SPY has given a total of eight consecutive buy signals despite experiencing several pullbacks along the way, none of which were ever material enough to move the chart to a sell signal. As the SPY continued its recovery following the COVID-19 sell-off and its price pushed higher, we eventually saw the fund move back into an overall positive trend in April 2020.
With March 2020 in the rearview mirror, we find the SPY positioned well from a technical perspective. Today, the chart sits well above the bullish support line, continues to show follow through to the upside, and has many levels of support available due to the handful of typical retreats that we saw take place over the last 18 months. While we are in a historically seasonally weak period for stock markets (the months of August and September), Overall, the weight of the evidence continues to be positive for SPY and U.S. equities.
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