Three of the world's four largest sector-based exchange traded funds face a shake-up due to proposed changes in their composition that would reclassify major companies in information technology indices as financial or industrial.
S&P Dow Jones Indices and MSCI have launched a consultation on a potential revamp of the widely followed Global Industry Classification Standards (GICS) that determine which sector each company is placed in.
This debate could have meaningful consequences, with the weighting of banks in the $45.7bn $Financial Select Sector SPDR Fund (XLF.US)$, as well as other ETFs such as $11.6bn $Vanguard Financials ETF (VFH.US)$, falling below one-third, from a peak of 45.4 per cent in 2013 according to S&P data, if the proposed changes come into force.
However, the $49bn $The Technology Select Sector SPDR® Fund (XLK.US)$ , the world's largest sector ETF, according to data from TrackInsight, and the $48.2bn $Vanguard Information Technology ETF (VGT.US)$ would become both more cyclical — prone to rise and fall in line with the economy — and more concentrated as the sector is stripped of several stocks, including three of its eight largest.
“Some of the largest information technology companies in the S&P 500 index could be changing sectors.”
- said Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research.
“At least seven of its large-cap company sector constituents are potentially moving to a new sector,” Rosenbluth added, with the knock-on effect that "banks would no longer dominate broad financial ETFs."
MSCI and S&P are proposing that "transaction and payment processing companies" are switched from the information technology sector of the GICS framework to the financial sector. This would impact companies such as $Visa (V.US)$, $MasterCard (MA.US)$ and $PayPal (PYPL.US)$, which have a combined market capitalisation of more than $1tn and are, respectively, the fourth, sixth and eighth largest stocks in the IT sector.
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The technology category would be further denuded by being stripped of its data processing and outsourced services, and payroll processing sub-industry groupings, which would be switched to the industrial sector under the proposals.
This would impact companies such as $Fidelity National Information Services (FIS.US)$, $Broadridge Financial Solutions (BR.US)$ and $Automatic Data Processing (ADP.US)$. The proposed changes would result in heightened concentration in the technology sector, coming as they do on top of a 2018 reshuffle that saw $Meta Platforms (FB.US)$, $Twitter (Delisted) (TWTR.US)$, $Snap Inc (SNAP.US)$and $Alphabet-A (GOOGL.US)$, the parent of Google, transferred to communication services. $Microsoft (MSFT.US)$ and $Apple (AAPL.US)$ already account for a combined 44.7 per cent of the S&P 500 Information Technology index, even before the latest proposals.
MSCI and S&P are currently consulting on the proposals, with a decision due in February.
Source: Financial Times

$The Technology Select Sector SPDR® Fund (XLK.US)$ That's largely true.  Mostly people in cars just do not see motorcycles.  But when electric cars became more popular, there were accidents caused when other drivers  could not hear them.  Since car drivers can't see a motorcycle, it's not that great an idea to make motorcycles quieter - though anyone who sat next to a vintage two stroke during a stop light might think they need to be quieter.  Lol.  Noise doesn't impact riding skills, but if other drivers can't hear you and don't see you, that's a problem.  I've put hundreds of thousands of miles on big touring bikes and have personal knowledge that attitudes by some car drivers towards motorcycles are bad enough without worrying that we are invisible to them on the road.

Last week, I mentioned we might be witnessing a potential market top because of the 3 signs showing up. However, confirmation via a change of character bar and spike of supply did not appear.
As the $E-mini S&P 500 Futures(DEC4) (ESmain.US)$ , $E-mini NASDAQ 100 Futures(DEC4) (NQmain.US)$ and the $E-mini Dow Futures(DEC4) (YMmain.US)$ are all at all time high while the earnings reports from $Apple (AAPL.US)$ and $Amazon (AMZN.US)$ disappointed investors, should you jump in the stock market right now?
The short answer is it depends and I will show you what you might want to consider before making a decision.
Market Recap
First, let's take a look at S&P 500 futures (ES) and what's happening last week.
The first sign of emerging supply was on 22 Oct, as highlighted in blue where there is increasing of volume without upside progress as S&P 500 was testing the previous all-time high resistance at 4550.
On 25 Oct (Monday), S&P 500 broke and close at all time high. However, increasing of supply hit on Tuesday and Wednesday as highlighted in orange where bearish price action was in sync with increasing of volume. This was the time where the bear can take initiative to overwhelm the bull.
Yet, there was no follow through and commitment to the downside. Just after a test of the axis line (where the resistance-turned-support), S&P 500 absorbed the supply on Thursday and once again close at all time high on Friday.
In short, there is still no excessive supply to kick start a pullback yet.
How far can S&P 500 go?
Based on Point & Figure price target projection, there is a minimum target of 4740, suggests that there is still enough fuel in the tank for more upside ahead for S&P 500.
From the analysis, the bias of the market direction is still up until emergence of excessive supply and a change of character shows up.
Ready to buy? Things you need to consider
Every successful trader or investor have a plan and they do stick to it. If you are an investor who only pay attention to the intrinsic value of a stock, market timing might not be that relevant to you since the investing thesis is likely to buy the stock at price with a safety margin and wait till the stock materializes at least to its intrinsic value (and beyond).
For traders (both short and long term), the trend of the broad market is up and it is time to focus on outperforming sectors (e.g. $The Technology Select Sector SPDR® Fund (XLK.US)$ , $Consumer Discretionary Select Sector SPDR Fund (XLY.US)$ , $Financial Select Sector SPDR Fund (XLF.US)$ , $Energy Select Sector SPDR Fund (XLE.US)$ ) and stocks in order to beat the market.
Follow your trading plan (including entry, stop, % of risk taken and position size) and execute when the setup is triggered. Next, you can just sit back, relax and manage your trade according to your trading plan to maximize the profits and limit the losses.
If you are wondering what if your analysis, execution or trade management was wrong? No matter which part goes wrong, you are at least protected by the risk you have set before you enter a trade, which is the amount you are willing to lose when you are wrong. So, risk management is the key and you will especially appreciate it during bad time.
Do think about your trading style, timeframe and risk appetite before you consider to start trading or investing in the stock market now.
Safe trading.

$Vanguard Dividend Appreciation ETF (VIG.US)$ Follow your growth

$Vanguard Total International Stock ETF (VXUS.US)$ Huat ah $!!!

I think for newbies like myself, I would suggest to perhaps buy a fix amount at a fixed period no matter the price, and I'm looking at $The Technology Select Sector SPDR® Fund (XLK.US)$

$The Technology Select Sector SPDR® Fund (XLK.US)$
1) Do Nothing
2) Buy more
What not to do
1) Panic Sell

$Vanguard Total International Stock ETF (VXUS.US)$ Huat Ah!