Marilyn Monroe may have sung that diamonds are a girl’s best friend. But right now, “Diamonds” are a trader’s favorite! Specifically, the SPDR Dow Jones Industrial Average ETF (DIA) – once affectionately referred to as the “Dow Diamonds” – is quietly outperforming.
Just look at the MoneyShow Chart of the Day, which shows the percentage change in the DIA versus the Invesco QQQ Trust (QQQ) since the end of October. The DIA is outshining the QQQ, with a gain of 1.4% versus a loss of 2.2% for the tech-levered ETF (through yesterday afternoon).
Source: Yahoo Finance
You can see a similar pattern in S&P 500 sector ETFs. The Financial Select Sector SPDR Fund (XLF) rose 3.2% and the Industrial Select Sector SPDR Fund (XLI) gained 0.2% during the same timeframe. The Technology Select Sector SPDR Fund (XLK) lost 3.1%.
I’ll get the obvious caveat out of the way here: We’re only talking about a two-week trend. There’s no telling if it’ll last...or if we’ll revert back to a tech-led market before we all dive into our Thanksgiving turkeys.
But consider the logic of the trade here. For one thing, investors tend to look for new leaders at the end of one year and the beginning of the next. For another, the Artificial Intelligence “Boom or Bubble” debate keeps raging. Those forces are likely fueling some rotational action.
The end of the government shutdown could help goose the economy, too, as affected workers get back pay and start spending it. Throw in the potential for new “stimmy” checks, an idea that has been floated in Washington, and you can see why more economically sensitive sectors and stocks could catch a bid.
Long story short? Maybe it’s time to “shop” for DOW diamond-type names in your portfolio this holiday season.
