XLI Holdings May Rise after Triggering Bullish Crossover



XLI has lost 2.4% over the past month

Manufacturing is said to be entering a recessionary phase in the US economy. With the sluggish outlook on manufacturing activities, the Industrial Select Sector SPDR ETF (XLI), an industrial-focused fund, has fallen 2.4% over the past month as of December 30, 2015. It has risen 7.0% over the past three months and has fallen 5.6% year-to-date (or YTD).

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GE has the most weight in XLI

XLI has about 99.4% weight in industrial stocks. Its top holdings include General Electric (GE), 3M (MMM), Boeing (BA), Honeywell International (HON), and United Technologies (UTX). GE holds the most weight in XLI at 10.9%. MMM and BA hold 5.2% and 5.1%, respectively, in XLI. HON and UTX have 4.5% and 4.3% weight, respectively, in XLI as of November 29, 2015.

XLI holdings performed poorly over the past month

Due to a decline in production and new orders, industrial stocks have been performing poorly over the past month. Of the top five holdings, two stocks have fallen YTD. MMM and UTX have fallen 7.6% and 15.7%, respectively, YTD as of December 30, 2015. GE, BA, and HON rose 22.9%, 12.6%, and 4.5%, respectively, over the same period.

Bullish crossover

Of all the mentioned top holdings of XLI, except for UTX, the 20-day moving averages are crossing over the 100-day moving averages. This is considered a bullish crossover. Analysts estimate a rise of 5.8%, 5.3%, 12.5%, and 10.9% for GE, MMM, BA, and HON, respectively, over the next 12 months.

Although manufacturing stocks have performed poorly in the past, the bullish crossover highlights that the stocks are all set for an uptrend going forward.

In the next article, let’s take a look at another industrial-focused ETF, the SPDR Dow Jones Industrial Average ETF (DIA).


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