Semi HOLDR Leads Tradable Funds
Thanks to Thursday’s U-turn in
semicondcutor, fiber-optic, and B2B stocks, the tradable tech funds erased
intraday red ink to finish in positive territory. There were pockets of weakness
in some of the Internet-focused exchange-traded funds and in the rate-senstitive
ETFs.
Stay cautious. The market is trying to
find its footing, but I still am bothered by the scarcity of high relative
strength stocks forming sound bases. If you trade intermediate-term momentum,
this market has more hoops to jump before the odds of a bull trap diminish.
Dave Landry, for one, smells a
possible short-covering rally in Thursday’s reversal. For more on Dave’s take on
the market, check out his latest Stock
Trading Outlook commentary. I also recommend you look at the
impressive array of bearish charts in Kevin Marder’s post-close commentary.
Now, as for Thursday’s action in exchange-traded
funds…Â
The Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)
closed up 5.1%, the
day’s sharpest gain among the ETFs.
Among the HOLDR’s components, Altera
(
ALTR |
Quote |
Chart |
News |
PowerRating)
jumped 12.6%, Applied Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating) 8.9%, Intel
(
INTC |
Quote |
Chart |
News |
PowerRating) 8.2%, LSI
Logic
(
LSI |
Quote |
Chart |
News |
PowerRating) 7.6%, Maxim Integrated Products
(
MXIM |
Quote |
Chart |
News |
PowerRating) 7.9%, SanDisk
(
SNDK |
Quote |
Chart |
News |
PowerRating)
10.0%, Teradyne
(
TER |
Quote |
Chart |
News |
PowerRating) 11.7%. The volume behind many of these moves, however,
was less than impressive.Â
Trading activity was more convincing
in the business-to-business space. The B2B Internet HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating) rose 4.9% on
heavy volume. Component Ariba
(
ARBA |
Quote |
Chart |
News |
PowerRating), which predominates in the HOLDR with
a 46% weighting, jumped 15.1%.
The Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating)
rose 3.2%, the Dow Jones Technology iShares
(
IYW |
Quote |
Chart |
News |
PowerRating) 2.6%, the Technology SPDR
(
XLK |
Quote |
Chart |
News |
PowerRating) 2.4%, the Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating) 1.6%.
Older economic segments registered
gains as well the Dow Jones Basic Materials iShares
(
IYM |
Quote |
Chart |
News |
PowerRating) 2.0%, the Basic
Industries SPDR
(
XLB |
Quote |
Chart |
News |
PowerRating) 1.7%.
On the downside, rate-sensitive ETFs
came under pressure. The Financial SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating) lost 3.2%. the Dow Jones
Financial iShares
(
IYF |
Quote |
Chart |
News |
PowerRating) 2.3%, the Regional Banking HOLDR
(
RKH |
Quote |
Chart |
News |
PowerRating) 1.2%.
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.
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.
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