Options Trading News

January 13, 2011  Thu 8:33 AM CT


As we head into the thick of earnings season next week, getting a handle on what sectors have helped--or hurt--the broader market is a good way to prepare. In our chart for today, a one-year comparison of the S&P 500 (teal) and the Consumer Discretionary Select Sector SPDR (magenta), it's clear to see how important the sector has been.

Although consumer discretionary is just a bit more than 10 percent of the weight of the S&P 500, it has outperformed the broader index by 2 to 1. As can be seen in September, when the sector was at the zero line, the S&P 500 was in negative territory.

In just four months, the sector rose 24 percent from that zero line. The S&P rose by 20 percent from its lows in the same period.


Within the consumer discretionary sector, just a few heavily weighted stocks were the biggest contributors to the gains. Two to watch are Ford, which has risen more than 60 percent since September, and Amazon, which has risen by nearly 50 percent in the same interval.

Ford has a 5.6 percent weight in the sector; Amazon is next, at 5.35 percent.Walt Disney and McDonald's, which are more heavily weighted, actually underperformed on a relative basis.

The four names together compose 23.5 percent of the sector's weight. So how these four names react to earnings will have a great deal to do with how well the sector does--and, in turn, the broader index.

(Chart courtesy of tradeMONSTER)

Share this article with your friends

Related Stories


Caution reigns in consumer space

November 13, 2015

The SPDR Consumer Discretionary Fund is the worst-performing of the major ETFs that track broad market sectors, hurt by weak retail numbers.


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »