Thursday's Market Minute: Money Flow Confirms Sector Rotation

Over the last 3 trading sessions the market has experienced a healthy rotation from some of the outperforming sectors like Information Technology and Semiconductors, to their less flashy counterparts like Energy, Industrials, and Financials. But this rotation is not just sector based, it also encompasses the change in money flows from mega-cap names to small and mid-cap companies. One of the biggest pushbacks on a new bull market being born is the fact that only a handful of stocks or one or two sectors were carrying the market. That thesis may be fading quickly, showing a new risk-on tone in the marketplace. As of writing this article the month-to-date returns for the S&P 500 Sector Indexes are as follows: 

As you can see the sectors that have been lagging the broader market indexes have been able to outperform so far in the month of June. If you take a look at ETF Fund Flows, it also paints a picture of money committing to this broader rally. Now, one thing to note, ETF Fund Flows change on a daily basis, but it is another tool traders may utilize to get a better understanding of investor interest. The data below was sourced by ETF.com.

It is interesting to note the decline in flows for the energy ETF XLE but understand that the Russell 2000 has a significant portion of its weighting in small cap energy companies which have been moving higher over the last several trading sessions. The market has also experienced a bounce in financial stocks, specifically the regional banks, as short positions are beginning to be covered and investor begin speculating on a short-term bottom being priced into the sector. 

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