This is an education-style publication where the main graph is a comparison (ratio) between two ETFs (funds) managed by State Street Global Advisors Corporation, the creator of the world’s first ETF (well-known in nowadays as
SPY
) and an indexing pioneer.
The first one ETF is The Technology Select Sector SPDR Fund,
XLK
.
👉
XLK
seeks to provide investment results that provide an effective representation of the Technology sector of the S&P 500 Index
SPX
.
👉
XLK
seeks to provide precise exposure to companies from Technology hardware, storage, and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components.
👉
XLK
is a place where securities of American World-known Technology companies like Apple Inc.
AAPL
and Microsoft Corp.
MSFT
, like Nvidia Corp.
NVDA
and American Micro Devices
AMD
, like Cisco Systems Inc.
CSCO
and Adobe Inc.
ADBE
meet together.
👉 In contrast with other Technology-related ETFs like
QQQ
(Invesco Nasdaq 100 Index ETF) or
ONEQ
(Fidelity Nasdaq Composite Index ETF), stocks allocation in
XLK
depends not only on their market capitalization, but also hugely on Technology industry allocation (like software, technology hardware, storage & peripherals, semiconductors & semiconductor equipment, IT services, communications equipment, electronic equipment instruments & components).
That is why allocation of Top 3 holdings in
XLK
( Microsoft Corp.
MSFT
, Apple Inc.
AAPL
and Broadcom Inc.
AVGO
) prevails 50 percent of Funds assets under management.
👉 Typically
XLK
holdings are Growth investing stocks.
The second one ETF is The Energy Select Sector SPDR Fund,
XLE
.
👉
XLE
seeks to provide investment results that provide an effective representation of the energy sector of the S&P 500 Index
SPX
.
👉
XLE
seeks to provide precise exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries.
👉
XLE
allows investors to take strategic or tactical positions at a more targeted level than traditional style based investing.
👉
XLE
is a place where stocks of American World-known Oil companies like Exxon Mobil Corp.
XOM
and Chevron Corp.
CVX
, like EOG Resources Corp.
EOG
and ConocoPhillips
COP
, like Valero Energy Corp.
VLO
and Phillips 66
PSX
meet each other.
👉 Weight of Top 3 holdings in
XLE
(Exxon Mobil Corp.
XOM
, Chevron Corp.
CVX
and EOG Resources Corp.
EOG
) prevails 45 percent of Funds assets under management.
👉 Typically
XLE
holdings are Value investing stocks.
The main graph represents different stock market stages of work
🔁 Early 2000s, or post Dot-com Bubble stage, that can be characterized as Energy Superiority Era. There were no solid Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates
TNX
,
TYX
as well as U.S. Federal Funds Rate
USINTR
were huge like nowadays. Crude oil prices
UKOIL
,
USOIL
jumped as much as $150 per barrel.
The ratio between
XLK
and
XLE
funds collapsed more than in 10 times over this stage.
🔁 Late 2000s to early 2010s, or post Housing Bubble stage, that can be characterized as a Beginning of Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates
TNX
,
TYX
as well as U.S. Federal Funds Rate
USINTR
turned lower. Bitcoin born.
The ratio between
XLK
and
XLE
funds hit the bottom.
🔁 Late 2010s to early 2020s, or post Brexit stage, that can be characterized as a Continuation of Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates
TNX
,
TYX
as well as U.S. Federal Funds Rate
USINTR
turned to Zero or so. Crude oil turned to Negative prices in April 2020 while Bitcoin hit almost $70,000 per coin in 2021.
Ben Bernanke (14th Chairman of the Federal Reserve In office since Feb 1, 2006 until Jan 31, 2014) was awarded the 2022 Nobel Memorial Prize in Economic Sciences, jointly with Douglas Diamond and Philip H. Dybvig, "for research on banks and financial crises", "for bank failure research" and more specifically for his analysis of the Great Depression.
The ratio between
XLK
and
XLE
funds becomes great and respectively with monetary stimulus hit the all time high.
🔁 Early 2020s, or post Covid-19 Bubble stage, that specifically repeats early 2000s Energy Superiority Era. There is no again Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates
TNX
,
TYX
as well as U.S. Federal Funds Rate
USINTR
are huge nowadays like many years ago. Commodities prices like Wheat
ZW1!
, Cocoa
CC1!
, Coffee
KC1!
, Crude oil prices
UKOIL
,
USOIL
jump again to historical highs.
The ratio between
XLK
and
XLE
funds is fading to moderate levels that can be seen as 200-Month simple moving average.
💡 In a conclusion.. I wonder, how the history repeats itself.
This is all because markets are cyclical, and lessons of history always still remain unlearned.
💡 Author thanks PineCoders TradingView Community, especially to @disster PineCoder for its excellent and simple script Quantitative Easing Dates .
Based on this script, Easing Dates are highlighted at the graph.
The first one ETF is The Technology Select Sector SPDR Fund,
👉
👉
👉
👉 In contrast with other Technology-related ETFs like
That is why allocation of Top 3 holdings in
👉 Typically
The second one ETF is The Energy Select Sector SPDR Fund,
👉
👉
👉
👉
👉 Weight of Top 3 holdings in
👉 Typically
The main graph represents different stock market stages of work
🔁 Early 2000s, or post Dot-com Bubble stage, that can be characterized as Energy Superiority Era. There were no solid Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates
The ratio between
🔁 Late 2000s to early 2010s, or post Housing Bubble stage, that can be characterized as a Beginning of Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates
The ratio between
🔁 Late 2010s to early 2020s, or post Brexit stage, that can be characterized as a Continuation of Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates
Ben Bernanke (14th Chairman of the Federal Reserve In office since Feb 1, 2006 until Jan 31, 2014) was awarded the 2022 Nobel Memorial Prize in Economic Sciences, jointly with Douglas Diamond and Philip H. Dybvig, "for research on banks and financial crises", "for bank failure research" and more specifically for his analysis of the Great Depression.
The ratio between
🔁 Early 2020s, or post Covid-19 Bubble stage, that specifically repeats early 2000s Energy Superiority Era. There is no again Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates
The ratio between
💡 In a conclusion.. I wonder, how the history repeats itself.
This is all because markets are cyclical, and lessons of history always still remain unlearned.
💡 Author thanks PineCoders TradingView Community, especially to @disster PineCoder for its excellent and simple script Quantitative Easing Dates .
Based on this script, Easing Dates are highlighted at the graph.