Compare the charts below of the SPDR US technology sector ETF (XLK) vs. the iShares CDN technology sector (XIT).
Clearly, US technology has bullishly broken out from its sideways pattern that began earlier this year. Meanwhile, the CDN technology ETF remains trading in a very tight range – one that hasn’t been cracked since it began in March.
Why hasn’t XIT broken out?
When examining the XIT ETF’s individual holdings and their weightings, you can see that its dominated by 5 positions – 2 of which represent 47% of that ETF. Let’s take a look at these 2 stocks.
The largest holding in XIT –weighing in at almost 27% of the ETF, is CGI (GIB.A). We hold a position in this stock within our ValueTrend Managed Equity Platform. Note the lovely breakout from a downtrend. This breakout occurred right at the long termed bullish trendline. CGI looks like it will challenge its old highs around $56 soon – and hopefully go on to new highs in continuation of that longer termed trendline.
The second largest holding of XIT is Constellation Software (CSU). This stock is still caught in a flat market. I’d not enter the stock until it broke out of its old lid at $590. But, it would be enticing should it do so. Such a breakout would be bullish for CSU, given the lack of overhead resistance and long termed uptrend on this stock.
The next largest holdings in XIT display much more volatility in price patterns. I didn’t post their charts but you can look them up if you are curious. Their approximate weightings within the ETF are: Open Text (15%), Blackberry (9%) and DH Corp (7%). All in, the top 5 holdings represent something like 77% of XIT. Given the uninspiring charts on most of them, GIB.A and CSU being two exceptions – I’d probably buy select individual stocks within the index rather than the ETF.
Last week’s BNN show
Here is the video from last Thursday Nov. 5th MarketCall program.
Special BNN show with Keith Richards
I’ve been invited for a special week of top BNN MarketCall guests. My appearance is for next week – Thursday November 19th at 6:00pm. Be sure to mark this one in your calendar.