Nearly $200 million via block trading exited SPDR Select Consumer Discretionary (XLY) on Wednesday. The activity depleted XLY's assets under management by roughly 8.5%, and it occurred on 3x the normal trading volume.
Some folks may be quick to dismiss this trend. After all, four out of five of the high beta-sectors (i.e., tech, energy, materials, financials, consumer discretionary) are leading the market higher... exactly as they are expected to do. And it is entirely possible that a rotation into "financials" from "consumer discretionary" will prevent a January correction.
On the flip side, if financials do not continue to advance, an absence of participation by both financials and consumer discretionary might cause high beta sectors to capitulate. Indeed, the performance of SPDR Financials (XLF) over the next few weeks of earnings and dividend restoration will be crucial. In the meantime, does it make sense to buy consumer stocks via XLY or iShares DJ Consumer (IYC)? I wouldn't. Post-holiday uncertainty, the Fed's five-year warning on "normal" job numbers, the eventuality of higher interest rates, the end of endless government stimulus, short-sale mania and a deleveraging public is enough to keep me focused on
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