Tech stock Vs Energy stocks. The Competition for Decades This is an education-style publication where the main graph is a comparison (ratio) between two ETFs (funds) managed by State Street Global Advisors Corporation, the creator of the world’s first ETF (well-known in nowadays as AMEX:SPY ) and an indexing pioneer.
The first one ETF is The Technology Select Sector SPDR Fund, AMEX:XLK .
👉 AMEX:XLK seeks to provide investment results that provide an effective representation of the Technology sector of the S&P 500 Index SP:SPX .
👉 AMEX:XLK seeks to provide precise exposure to companies from Technology hardware, storage, and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components.
👉 AMEX:XLK is a place where securities of American World-known Technology companies like Apple Inc. NASDAQ:AAPL and Microsoft Corp. NASDAQ:MSFT , like Nvidia Corp. NASDAQ:NVDA and American Micro Devices NASDAQ:AMD , like Cisco Systems Inc. NASDAQ:CSCO and Adobe Inc. NASDAQ:ADBE meet together.
👉 In contrast with other Technology-related ETFs like NASDAQ:QQQ (Invesco Nasdaq 100 Index ETF) or NASDAQ:ONEQ (Fidelity Nasdaq Composite Index ETF), stocks allocation in AMEX:XLK depends not only on their market capitalization, but also hugely on Technology industry allocation (like software, technology hardware, storage & peripherals, semiconductors & semiconductor equipment, IT services, communications equipment, electronic equipment instruments & components).
That is why allocation of Top 3 holdings in AMEX:XLK ( Microsoft Corp. NASDAQ:MSFT , Apple Inc. NASDAQ:AAPL and Broadcom Inc. NASDAQ:AVGO ) prevails 50 percent of Funds assets under management.
👉 Typically AMEX:XLK holdings are Growth investing stocks.
The second one ETF is The Energy Select Sector SPDR Fund, AMEX:XLE .
👉 AMEX:XLE seeks to provide investment results that provide an effective representation of the energy sector of the S&P 500 Index SP:SPX .
👉 AMEX:XLE seeks to provide precise exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries.
👉 AMEX:XLE allows investors to take strategic or tactical positions at a more targeted level than traditional style based investing.
👉 AMEX:XLE is a place where stocks of American World-known Oil companies like Exxon Mobil Corp. NYSE:XOM and Chevron Corp. NYSE:CVX , like EOG Resources Corp. NYSE:EOG and ConocoPhillips NYSE:COP , like Valero Energy Corp. NYSE:VLO and Phillips 66 NYSE:PSX meet each other.
👉 Weight of Top 3 holdings in AMEX:XLE (Exxon Mobil Corp. NYSE:XOM , Chevron Corp. NYSE:CVX and EOG Resources Corp. NYSE:EOG ) prevails 45 percent of Funds assets under management.
👉 Typically AMEX:XLE holdings are Value investing stocks.
The main graph represents different stock market stages of work
🔁 Early 2000s, or post Dot-com Bubble stage, that can be characterized as Energy Superiority Era. There were no solid Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates TVC:TNX , TVC:TYX as well as U.S. Federal Funds Rate ECONOMICS:USINTR were huge like nowadays. Crude oil prices TVC:UKOIL , TVC:USOIL jumped as much as $150 per barrel.
The ratio between AMEX:XLK and AMEX:XLE funds collapsed more than in 10 times over this stage.
🔁 Late 2000s to early 2010s, or post Housing Bubble stage, that can be characterized as a Beginning of Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates TVC:TNX , TVC:TYX as well as U.S. Federal Funds Rate ECONOMICS:USINTR turned lower. Bitcoin born.
The ratio between AMEX:XLK and AMEX:XLE funds hit the bottom.
🔁 Late 2010s to early 2020s, or post Brexit stage, that can be characterized as a Continuation of Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates TVC:TNX , TVC:TYX as well as U.S. Federal Funds Rate ECONOMICS:USINTR turned to Zero or so. Crude oil turned to Negative prices in April 2020 while Bitcoin hit almost $70,000 per coin in 2021.
Ben Bernanke (14th Chairman of the Federal Reserve In office since Feb 1, 2006 until Jan 31, 2014) was awarded the 2022 Nobel Memorial Prize in Economic Sciences, jointly with Douglas Diamond and Philip H. Dybvig, "for research on banks and financial crises", "for bank failure research" and more specifically for his analysis of the Great Depression.
The ratio between AMEX:XLK and AMEX:XLE funds becomes great and respectively with monetary stimulus hit the all time high.
🔁 Early 2020s, or post Covid-19 Bubble stage, that specifically repeats early 2000s Energy Superiority Era. There is no again Quantitative Easing and Money printing. U.S. Treasury Bond Interest rates TVC:TNX , TVC:TYX as well as U.S. Federal Funds Rate ECONOMICS:USINTR are huge nowadays like many years ago. Commodities prices like Wheat CBOT:ZW1! , Cocoa ICEUS:CC1! , Coffee ICEUS:KC1! , Crude oil prices TVC:UKOIL , TVC:USOIL jump again to historical highs.
The ratio between AMEX:XLK and AMEX:XLE funds is fading to moderate levels that can be seen as 200-Month simple moving average.
💡 In a conclusion.. I wonder, how the history repeats itself.
This is all because markets are cyclical, and lessons of history always still remain unlearned.
💡 Author thanks PineCoders TradingView Community, especially to @disster PineCoder for its excellent and simple script Quantitative Easing Dates .
Based on this script, Easing Dates are highlighted at the graph.
