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Market Sell-Off Tough, But Could Offer Opportunities Like These

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The stock market sold off hard Thursday, but that doesn't mean investors should tune out.

It's a good time to search for new opportunities that may be setting up. Stocks and funds that were too extended could be ready to test their support lines.

A case in point: SPDR S&P 500 Growth ( SPYG ), which had at one point climbed out of buy range in early June, has now pulled back to its 50-day moving average line. A solid rebound off the line can present a chance to buy shares.

SPYG advanced 5% from a flat-base breakout past a 114.82 buy point cleared April 24 to its June 5 peak. If one had bought ahead of the breakout on a pullback to the 50-day line near 113, the gain would have been 7%.

Despite Thursday's drop, the $848.9 million behemoth, which got its start in September 2000, is trading 2% below its June all-time high. Technology accounted for the biggest sector weight as of June 27, 31%, followed by 16% in health care, 14% in consumer cyclicals and 12% in industrials.

[ibdchart symbol="SPYG" type="daily" size="threequarter" position="leftchart" /]

Its top five holdings read like a Who's Who of big-cap techs: Apple ( AAPL ), Microsoft ( MSFT ), Amazon.com ( AMZN ), Facebook ( FB ) and Alphabet (GOOGL). They all fell Thursday, with varying results. Amazon and Facebook are finding support at the 50-day, Apple is consolidating below its 50-day line, and Microsoft and Alphabet have breached the support line.

SPYG has outperformed the S&P 500 year to date through June 28, 14.3% to 10.11%. Its average annual returns over the past three, five and 10 years have also come in ahead of the benchmark index's. The ETF's expense ratio is 0.15%.

IShares Russell 1000 (IWF) shows similar action to SPYG. It found support at its 50-day line on Thursday and managed to close above it. The $35.5 billion fund, which launched in May 2000, held the same five top stocks as SPYG. The sector weightings are also similar: 32% in technology, 17% in consumer cyclicals, and about 13% each in health care and industrials.

[ibdchart symbol="IWF" type="daily" size="threequarter" position="leftchart" /]

IWF has outpaced the S&P 500 over the YTD, three-year and 10-year periods. Both funds are roughly in line with the benchmark index's 8.4% average annual return over the past 15 years. IWF carries a 0.20% expense ratio.

Thursday's ETF picks closed below their respective 50-day lines as techs sold off. VanEck Vectors Semiconductor (SMH) and iShares PHLX Semiconductors (SOXX) could still find support near the line. Keep in mind, however, the market uptrend is under pressure, which increases risk for all purchases.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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