Another Bath In Red

Losses in chip and PC makers combined
Thursday with economic data raising the odds of a “hard landing” to
bathe the exchange-traded funds in red, with tech-focused ETFs leading the way.
Many of the tech funds, though, substantially pared their losses by the end of
the session.

The Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)

plunged 7.8% on heavy volume. It was the day’s sharpest loss among the exchange-traded
funds
. 

The top field of all charts in this
commentary uses a logarithmic price scale and displays a 50-day price average in
red. In cases where the displayed has traded long enough, the top field also
will exhibit a 200-day moving price average in black. In the second field, a
blue relative strength line represents the displayed security’s price
performance relative to the S&P 500. The third field displays vertical daily
volume bars in black with a 50-day moving average in blue for volume.

Chipmakers suffered along with PC
makers as a result of reported from computer makers Micron Electronics
(
MUEI |
Quote |
Chart |
News |
PowerRating)

and Gateway
(
GTW |
Quote |
Chart |
News |
PowerRating)
of slowing sales and declining memory chip prices.

Intel
(
INTC |
Quote |
Chart |
News |
PowerRating)
, the heaviest of the
Semiconductor HOLDR’s components, shed 11.0%. Altera
(
ALTR |
Quote |
Chart |
News |
PowerRating)
lost 7.7%,
KLA-Tencor
(
KLAC |
Quote |
Chart |
News |
PowerRating)
8.1%, Applied Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating)
5.8%, Micron
Technology
(
MU |
Quote |
Chart |
News |
PowerRating)
8.2%, Novellus Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating)
11.1%.

The Internet HOLDR
(
HHH |
Quote |
Chart |
News |
PowerRating)
lost
5.5%, the Dow Jones Technology iShares
(
IYW |
Quote |
Chart |
News |
PowerRating)
5.3%, the Technology SPDR
(
XLK |
Quote |
Chart |
News |
PowerRating)

4.9%,  the Internet Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating)
4.5%.

Energy stocks fell again. The Energy
SPDR
(
XLE |
Quote |
Chart |
News |
PowerRating)
fell 3.4%, the Dow Jones Energy iShares
(
IYE |
Quote |
Chart |
News |
PowerRating)
2.6%.

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 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. 

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 href=”/.site/stocks/education/strategies/05262000-6129.cfm”>Moving
Average Crossovers. I also recommend newcomers read my tutorial, href=”/.site/stocks/education/strategies/06272000-6815.cfm”>Trading
HOLDRs: Unique Opportunity And Risk.

 

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