Basics, Energies Lead in ETF Land
While the percentage moves were not
pronounced, the tradable funds Wednesday registered gains across technology,
basic industries, energy and financial sectors. Many of the Net funds missed out
on the party, though. And there was more rotation out of defensives.
Morgan Stanley’s streetTRACKS High
Tech 35
(
MTK |
Quote |
Chart |
News |
PowerRating) gained 4.6%, the day’s biggest gain among the exchange-traded
funds. The Software HOLDR
(
SWH |
Quote |
Chart |
News |
PowerRating) rose 4.3%, the Dow Jones
Internet iShares
(
IYV |
Quote |
Chart |
News |
PowerRating) 3.0%.
The basics did well as did energy. The
Basic Industries SPDR
(
XLB |
Quote |
Chart |
News |
PowerRating) gained 3.0%, the Dow Jones Chemical iShares
(
IYD |
Quote |
Chart |
News |
PowerRating)
2.6%, the Dow Jones Energy iShares
(
IYE |
Quote |
Chart |
News |
PowerRating) 2.3%, the Energy SPDR
(
XLE |
Quote |
Chart |
News |
PowerRating)
2.2%.
Among the rate-sensitive
ETFs, the Cyclicals-Transportation SPDR
(
XLY |
Quote |
Chart |
News |
PowerRating) added 2.5%, the Dow Jones
Financial iShares
(
IYF |
Quote |
Chart |
News |
PowerRating) 2.3%, the Regional Banking HOLDR
(
RKH |
Quote |
Chart |
News |
PowerRating) 2.3%, the
Financial SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating) 2.2%, the Dow Jones Financial Services iShares
(
IYG |
Quote |
Chart |
News |
PowerRating)
2.1%.
On the downside, the
Internet HOLDR
(
HHH |
Quote |
Chart |
News |
PowerRating) lost 5.0%.The Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating) fell 2.4%,
cracking through a significant support level. The Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating)
declined 2.4%, the Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating) 2.3%, the Internet Infrastructure
HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating) 2.3%, the Dow Jones Healthcare iShares
(
IYH |
Quote |
Chart |
News |
PowerRating) 2.2%.
Exchange-traded funds combine traits
of stocks and mutual funds. Like mutual funds, an ETF represents diversified
ownership in a number of different stocks, reducing company-specific
risk. Like stocks, ETFs trade on exchanges, nearly all of them in fact trade on
the American Stock Exchange. 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.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.