Technology and Financial Sector Analysis Report For The Week Ending 6/26/20

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Many are wondering if the bear market will continue or have we seen the bottom in the bear market. There is probably no better clue than analyzing the S&P 500, but in particular the Technology and Financial Sector within the S&P 500.

The Standard & Poor's 500 Index (known commonly as the S&P 500) is an index with 500 of the top companies in the U.S. Stocks. Because the S&P 500 Index represents approximately 80% of the total value of the U.S. stock market, it’s the bellwether index for the U.S. stock market.

The U.S. stock market is the largest stock market in the world, it’s also the bellweather for equity markets around the world. The S&P 500 is arguably the most important stock market index on the planet.

The ETF, SPY represents the bellweather, the S&P 500 Index, which is a diversified large cap U.S. index that holds companies across all eleven sectors. One sector represented with a significant weighting is information technology.

The S&P 500 is a market capitalization-weighted index. The weight of a sector in the index is equal to the market cap of that sector divided by the total market cap of all the sectors.

The ETF, SPY represents the bellweather, the S&P 500 Index, which is a diversified large cap U.S. index that holds companies across all eleven sectors. The top two sectors in the SPY is technology (30%) and Financials (15%) which make up almost 50% of the SPY.

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Regarding the XLK, the top holdings in the XLK are:

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According to The Wall Street Journal, The Nasdaq’s advantage over the DOW and the S&P 500 is the biggest since 1983.

It feels like yesterday we were just talking about Apple, then Amazon hitting $1 trillion market cap milestone. Now Apple, Microsoft and Amazon all have over a trillion dollar market cap ($1.5 trillion to be exact). We are now starting to talk about Apple being the first 2 trillion dollar market cap company in six months. The market cap of Facebook, Apple, Amazon, Microsoft and Google is equal to the market cap of:

Adobe, Home Depot Coca-Cola, Pepsico, Merck, Bank of America, JP Morgan Chase, Cisco, Disney, Exon Mobil, Nvidia, Pfizer, United Health Group, Paypal, Intel, Netflix, Verizon, Walmart, Mastercard, AT&T and Johnson and Johnson.

So the question starts to become, is it the Feds and the tech sector holding the Markets up.

This week, Apple re-closing seven stores in the Houston area amid a resurgence of COVID-19 cases in Texas. Last week, Apple temporarily shut some locations in Florida, Arizona, North Carolina, and South Carolina, according to reports. Yet, Webush analyst Dan Ives raised his price target to $425 from $375, citing the selling of the first 5G phone in the coming months, service revenue continuing to increase.

Speaking of service revenue, the App Store brought in over $46 billion in 2019, making up nearly 18% of the company’s revenue. They did this by charges companies 30% from in-app purchases and 30% on subscriptions for the first year, then 15% thereafter. Developers are fed up, but know they can’t take their business because it would mean a lot of lost business.

XLK is trading at the $102.50 level which was a previous supply zone. Because the trend is still up, the pull back is a nice level to go long at .

Regarding the XLF, the top holdings are:

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Bank stocks surged after federal regulators on Thursday announced they plan to roll back post-financial crisis restrictions, including the Volcker Rule which prevent banks from making large investments into certain funds.

The Volcker Rule was originally established as part of the 2010 Dodd-Frank Act, with the aim of preventing banks from acting like hedge funds and taking irresponsible risks with their investments.

JPMorgan and Morgan Stanley saw their stocks rise more than 2%, while Citigroup and Bank of America are both up over 1.5%.

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To me this is giving the banks a license to be reckless again, but the news was good for banks stocks, so if you think this news is bullish for banks stocks and XLF, price is at a good level to go long with a target at the daily supply.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.

Posted Using LeoFinance



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