Size Matters:

Concentration versus diversification. As the old adage goes “concentration builds wealth, and then diversification preserves it.” Comparing the XRT to the XLY, could be a good example of that philosophy. AMZN makes up nearly one quarter of the XLY, while the top component in the XRT comprises just 1.8% of the fund. That would be the stock of Overstock, which has been on a monumental run as today was rejected near the very round par number, after trading near 2.50 in late March, not a typo. ETSY is the second largest holding in the XRT and that too has enjoyed a stellar run up almost 200% YTD thus far. As one can see from the chart below the XRT has been outshining the XLY, and we mentioned yesterday how many companies are adapting well in the Amazon era. Other names in the XRT top 10 holdings include GPS, which may have beefed up its online capability, but I just focus on PRICE action. Hard to believe but its chart has a bullish tint to it, as it records its seventh straight CLOSE above its 200 day SMA. There are better fish to fry in the space in my opinion, but it is good to see a healthy amount of names acting well.

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