The overuse of the phrase ???crowded trade??? comes to mind when we think of certain Nasdaq stocks that occupy the top 10 spots within the Nasdaq 100 or that begin with the letters F-A-N-G.
For the past year and a half, these specific technology growth stocks and some other heavyweight names have done the heavy lifting for priming bullish market sentiment and driving index-related performance. There have been other sectors with similar performance (aerospace, defense, select industrial and select biotech), but none that come with the fanfare of owning big-cap tech.
One sector that has proven elusive in satisfying the animal spirits has been financials. Following the Trump win in November and heading into 2017 with the Fed???s stated dot plot plan of hiking the Fed Funds Rate four times during the year, investors quickly embraced banks, insurance, brokers and just about everyone else that was in the business of lending capital to both commercial and retail borrowers.
In fact, when comparing the Financial Select Sector SPDR ETF (XLF) that trades roughly 50 million shares per day to the Nasdaq 100 and the S&P 500, the charts don???t lie??? XLF is the best performing of the three because of the immediate 15% lift it enjoyed from the Trump win. And to the surprise of not just myself, XLF is still out in front as of September 15, 2017. The chart below pretty much tells the story as to why market pundits have been so ho-hum on the financials. The sector began the year at an elevated position and has really been consolidating that move for two quarters.