ETFs In The Aerospace And Defense Cybersecurity Sectors Are Poised For A Breakout

As global geopolitical tensions have escalated in recent months and cybersecurity concerns have become increasingly common, exchange-traded funds (ETFs) that invest in stocks that are linked to these concerns are forecast to make opportunities for breakouts, according to Renaissance Macro Research.

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First Trust Nasdaq Cybersecurity ETF CIBR, -0.61% has been climbing at an annual rate of 9.5% as of today, while the iShares U.S. Aerospace & Defense ETF ITA, -1.66% has been climbing at an annual rate of 4.5%. Data from Trade Algo shows that the First Trust Nasdaq Cybersecurity ETF has risen 9.5% over the same period. 

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In its latest research note, Renaissance Macro Research said that the market is displaying some warning signs. This is evident in the fact that the iShares U.S. Aerospace & Defense ETF and First Trust Nasdaq Cybersecurity ETF are allegedly on the verge of breaking out, it said.

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A new breakout from the "bearish trend" could be expected from the First Trust Nasdaq Cybersecurity ETF, while the iShares U.S. Military & Aerospace ETF is "looking to make new all-time highs during this period," Renaissance Macro stated in a note it released. In order to add to long positions in both, we would seek "relative confirmation" before adding to long positions.

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Throughout the day, investors have been paying attention to the conflicts between Russia and Ukraine, as well as the tensions between China and the United States. As a result of the Taiwanese president's recent visit to the U.S., China has said it is "ready to fight." According to a report published by the Associated Press on April 10, after completing combat exercises around Taiwan.

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This week also saw the arrest of Jack Teixeira, a 21-year-old Massachusetts Air National Guard member, on an unrelated charge regarding the leak of "highly classified military documents regarding the Ukraine war and other areas of national security of paramount importance."

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It seems President Joe Biden said Thursday that he is not aware of anything contemporaneous that is of great consequence, which was posted on social media sites, in regards to the leaked Defense Department documents, which have since been made public.

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According to BlackRock's website, Raytheon Technologies Corp. RTX, 0.01%, Boeing Co. BA, -5.43%, and Lockheed Martin Crop. LMT, -0.85%, were the top three holdings of the iShares U.S. Aerospace & Defense ETF on April 13 according to details of the fund in the administrator's section, according to WhiteRock's website. 

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There are a number of large holdings in the First Trust Nasdaq Cybersecurity ETF today, according to the website of First Trust. Some of the holdings include Fortinet Inc. FTNT, -0.48%, Broadcom Inc. AVGO, -0.77%, Cisco Systems Inc. CSCO, -0.50%, and Palo Alto Networks Inc. PANW, 0.81%.   

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During the last hour of trading Friday afternoon, the First Trust Nasdaq Cybersecurity ETF was down 0.8%, while the iShares U.S. Aerospace & Defense ETF had fallen 1.9%, according to Trade Algo data, at that time. 

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In Friday afternoon trading, the U.S. stock market fell broadly as investors digested big bank earnings, retail data showing a decline in sales in March, and a statement from Federal Reserve President. Despite the fact that inflation is "still much too high," Christopher Waller argued that the Fed should raise interest rates indefinitely. 

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At the time of last checking, Trade Algo data indicate that the Dow Jones Industrial Average DJIA, -0.42% was down 0.5% in Friday afternoon trading, while the S&P 500 SPX, -0.21% was down 0.3%, and technology-focused Nasdaq Composite COMP, -0.35% lost 0.5%. 

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