For investors seeking momentum, Technology Select Sector SPDR Fund (XLK - Free Report) is probably on radar now. The fund just hit a 52-week high, and is up roughly 48% from its 52-week low price of $66.95/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
XLK in Focus
This fund provides exposure to the technology segment of the broad U.S. stock market. It has key holdings in software, IT services, technology hardware storage & peripherals, as well as semiconductors & semiconductor equipment. The product charges 13 basis points in fees per year (see: all the Technology ETFs here).
Why the Move?
The technology corner of the broad U.S. stock market has been an area to watch lately, given that The People’s Bank of China has injected $1.7 trillion yuan ($242.9 billion) into the economy via reverse repos and unexpectedly lowered interest rates on reverse repurchase agreements by 10 bps. The move led to a strong rally in the technology sector, which has huge exposure to China.
More Gains Ahead?
Currently, XLK has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook, suggesting that the outperformance could continue in the months ahead. Further, many of the segments that make up this ETF have a strong Zacks Industry Rank, so there is definitely still some promise for those who want to ride on this surging ETF a little longer.
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