Financial, Defensive ETFs Fight Tide
Further evidence of a slowing economy
raised earnings fears, battering the tradable tech funds, but the same data
raised hopes that the Fed will ease rates sooner than later, which helped the
tradable financial funds.
New economic data showed durable good
orders declined by 5.5% in October from a revised gain of 2.4% in September. The
Conference Board reported its consumer confidence index for November fell to
133.5 from a revised 135.8 in October.
The Internet Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating)
and B2B HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating) both forfeited 9.4%, the day’s sharpest loss among the exchange-traded
funds.
Among the Internet Infrastructure
components, BEA Systems
(
BEAS |
Quote |
Chart |
News |
PowerRating) dropped 12.0%, Akamai Technologies
(
AKAM |
Quote |
Chart |
News |
PowerRating)
13.8%, BroadVision [BVSN |BVSN] 20.6%, Infospace
(
INSP |
Quote |
Chart |
News |
PowerRating) 15.8%, Inktomi
(
INKT |
Quote |
Chart |
News |
PowerRating)
18.8%.
The Dow Jones Internet Index iShares
(
IYV |
Quote |
Chart |
News |
PowerRating)
shed 9.2%, the Internet HOLDR
(
HHH |
Quote |
Chart |
News |
PowerRating) 7.5%, the Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)
6.8%, the Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating) 5.8%, the Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating)
5.8%, the Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating) 5.4%.
Exchange-traded funds serve as handy
proxies of strategy and sector performance. In this column, I usually focus on
sectors because that’s where one usually finds the rather widest divergences in
percentage performance. We now have ETFs that represent strategies, such as value
and growth.
If you’re a momentum-plus-growth
trader, you can see that your game is out of commission for the time being. Cash
is preferring value over growth these days, as you can see clearly a comparison
of the Russell 2000 Growth iShares
(
IWO |
Quote |
Chart |
News |
PowerRating) and the Russell 2000 Value iShares
(
IWN |
Quote |
Chart |
News |
PowerRating).
On the upside, the rate-sensitive
funds pulled ahead. Banking HOLDR
(
RKH |
Quote |
Chart |
News |
PowerRating) rose 1.9%, the day’s biggest gain
among the U.S.-focused exchange-traded funds. The Utilities SPDR
(
XLU |
Quote |
Chart |
News |
PowerRating) added
1.5%, the Financial SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating) 1.1%.
The defensives had a decent day as
well, expected in a general market downturn due to fears of a slowing economy
and pressure on earnings. The Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating) gained 1.3%, the
Consumer Staples SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating) 1.1%.
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.