To The Moon

Every recent pullback in the market has been viewed by as a good opportunity to sell and liquidate their positions. Retail investors are getting more cautious and the market is getting more panicked. So where exactly is the money flowing in this market environment?

According to the Morning star, capital inflows into ETFs in the consumer staples, utilities, healthcare, REITs and metals reached $50 billion by the end of April this year, already surpassing the $42 billion in net inflows for the full year of 2021.

These sectors-$Consumer Staples Select Sector SPDR Fund(XLP)$ $Utilities Select Sector SPDR Fund(XLU)$ $Health Care Select Sector SPDR Fund(XLV)$ $SPDR S&P Metals & Mining ETF(XME)$ have outperformed the broader market in the past 6 months. 

In these four sectors, mining and metal sectors perform best; healthcare still loses but does well than broader market.

Which opportunities do we have this year?

1. Mining and Metals:

If you don't know much about metals, I recommend you to watch $SPDR S&P Metals & Mining ETF(XME)$ in the chart above. This ETF outperforms over 20% of $S&P 500(.SPX)$ .

In addition, you can look at these stocks that $SPDR S&P Metals & Mining ETF(XME)$ tracks: $MP Materials Corp.(MP)$$Cliffs Natural Resources(CLF)$$Steel Dynamics(STLD)$$Alcoa(AA)$$U.S. Steel(X)$$Nucor(NUE)$$Peabody Energy Corp(BTU)$$Freeport-McMoRan(FCX)$$Newmont Mining(NEM)$$Royal(RGLD)$

2. Utilities:

When market tends to be volatile, utitily sector is naturally defensive because they are indispensable to people's life. Here are the stocks that $Utilities Select Sector SPDR Fund(XLU)$ tracks: $NextEra(NEE)$$Duke(DUK)$$Southern(SO)$$Dominion Resources(D)$$Sempra(SRE)$$American Electric Power(AEP)$$Exelon(EXC)$$Xcel Energy(XEL)$$Public Service Enterprise Group Inc(PEG)$$Consolidated Edison(ED)$

We can tell from the chart that stocks in utilities sector all enjoy rallies in past 6 months except for $NextEra(NEE)$ . This sector may continue benefit from the inflation environment. But investors should be cautious about your entry price. 

3. Consumer Staples:

CPI remains high and inflation will not subside in the short term. The $Consumer Staples Select Sector SPDR Fund(XLP)$ posted the biggest single-day outperformances of $Consumer Discretionary Select Sector SPDR Fund(XLY)$ in April. It indicates people have less money and anticipation for discretionary products, and capital begins to seek defensive sectors.

$Procter & Gamble(PG)$$Coca-Cola(KO)$$Costco(COST)$$Pepsi(PEP)$$Philip Morris(PM)$$Altria(MO)$$Mondelez(MDLZ)$$Wal-Mart(WMT)$$Estee Lauder(EL)$$Colgate-Palmolive(CL)$

This chart shows that most of consumer staples continue to rise in the past 6 months. But $Estee Lauder(EL)$suffers a lot because it was hit by China market. Its future strategy may determine whether estee lauder can bounce back.

To learn more about $Consumer Staples Select Sector SPDR Fund(XLP)$, I recommend you to read New High of XLP/ Food Ratings - Safe Investments during High Inflation!

What stocks you recommend for current market?

Share your thoughts in the comment section!