Cisco Hits Tech ETFs
Negative news from Cisco whacked the networking stocks and thus the
Net-focused exchange-trade funds.
Overnight, the No. 1 maker of networking gear missed Wall Street estimates
for the first time in more than six years and warned of a slowdown over at least
the next two quarters.
The B2B Internet HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating) shed
6.8%, the day’s sharpest loss among the exchange-traded
funds. Among its component stocks, Agile Software
(
AGIL |
Quote |
Chart |
News |
PowerRating)
fell 10.9%, Ariba
(
ARBA |
Quote |
Chart |
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PowerRating) 10.5%, PurchasePro
(
PPRO |
Quote |
Chart |
News |
PowerRating) 15.4%.
The Internet Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating)
lost 6.7%, the Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating) 4.6%, the Internet Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating)
4.6%, the Dow Jones Internet iShares
(
IYV |
Quote |
Chart |
News |
PowerRating) 4.2%, the Internet HOLDR
(
HHH |
Quote |
Chart |
News |
PowerRating)
3.9%, the Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating) 3.2%, the Technology SPDR
(
XLK |
Quote |
Chart |
News |
PowerRating)
2.6%, the Dow Jones Telecom iShares
(
IYZ |
Quote |
Chart |
News |
PowerRating) 2.5%.
I’ve been keeping an eye on the
relative performance of growth vs. value stocks. As the following chart shows,
value has again slammed growth back to the mat. This chart compares the
performance of S&P Growth Index
(
$SGX.X |
Quote |
Chart |
News |
PowerRating) relative to the S&P
Value Index
(
$SVX.X |
Quote |
Chart |
News |
PowerRating). This is a relative strength line, formed dividing
the close of the SGX by the close of SVX, then plotting that ratio for each
session over a given time span.
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.
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.