Staples, Drug Funds Lead ETFs
With the market inclined to discount a
Bush victory, tobacco and drug stocks notched gains Wednesday, enabling the
Consumer Staples SPDR and Pharmaceutical HOLDR to lead the tradable funds to the
upside.
The Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating)
moved ahead 2.4%. The Consumer Staples SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating), which contains a 32%
weighting in the drug sector and 3% weighting in tobacco, added 2.4%. Those were
the day’s sharpest gain among the exchange-traded
funds. The Dow Jones Healthcare iShares
(
IYH |
Quote |
Chart |
News |
PowerRating) rose 1.3%.
For more on the action in “Bush
stocks,” see my Trading
The News commentary.Â
Some of the commodity-priced-based
stocks and their ETFs moved higher, possibly reflective rotation out of Nasdaq
stocks, which did not take well to the election uncertainty. The Dow Jones Energy
iShares
(
IYE |
Quote |
Chart |
News |
PowerRating) rose 2.0%, the Dow Jones Chemical iShares
(
IYD |
Quote |
Chart |
News |
PowerRating) 1.6%, the
Dow Jones Basic Materials iShares
(
IYM |
Quote |
Chart |
News |
PowerRating) 1.5%, the Basic Industries SPDR
(
XLB |
Quote |
Chart |
News |
PowerRating)
1.1%.
On the downside, the Internet
Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating) slumped 9.0%, the B2B HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating) 8.9%, the
Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating) 8.0%, the Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)
7.9%, the Internet Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating) 7.6%, the Dow Jones Internet
iShares
(
IYV |
Quote |
Chart |
News |
PowerRating) 7.2%.
Exchange-traded funds combine traits
of stocks and mutual funds. Like mutual funds, an ETF represents diversified
ownership in a number of different stocks, greatly reducing company-specific
risk. Like stocks, ETFs trade on exchanges, nearly all of them, in fact, trade on
the American Stock Exchange at present. They quote throughout the day, enabling
traders to take advantage of intraday price moves.Â
If you’re new to exchange-traded funds,
be sure to visit TradingMarkets’ Knowledge Center,
dedicated to explaining the basics of trading and active investing in ETFs and
mutual funds. Just click on the Funds tab
near the top of this page, then click on the Knowledge
Center tab.Â
You also will find lessons on trading
exchange-traded funds in the Stocks Education area of TradingMarkets.com. In
particular, check out my three-part series on trading ETFs, starting with
Average Crossovers. I also recommend newcomers read my tutorial,
HOLDRs: Unique Opportunity And Risk.
All stocks and exchange-traded funds
are risky. In any new trade, reduce your risk by limiting your position size and
setting a protective price stop where you will sell your new buy or cover your
short in case the market turns against you. For an introduction to combining
price stops with position sizing, see my lesson,
Risky Business. For further treatment of these and related topics,
you’ll find extensive lessons in the Money
Management area of TradingMarkets’ Stocks Education section.