Financial Funds Follow Through
Brokers, banks,
and insurers rallied Friday, lifting tradable funds focused
on the financial sector, after a tame unemployment report
eased interest-rate fears.
The Financial
Sector SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating), which tracks the financial components
of the S&P 500, surged 3.9% to a 52-week high. It was
the day’s biggest advance among the
funds. The move followed through on the tradable fund’s
breakout from a cup-with-handle base, observed in Thursday’s
column. The Dow Jones Financial Sector iShares
(
IYF |
Quote |
Chart |
News |
PowerRating)
rose 2.5%.
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The Financial SPDR
now holds impressive relative strength in the 90s for all
time periods tracked by TradingMarkets.com. For more on
using relative strength to rate exchange-traded funds, check
out my tutorial
Strength: The Profitable Trader’s Edge.
The Labor
Department Friday morning reported 108,000 jobs were lost in
July. Economists polled by Reuters expected a gain of
58,000. That’s the first decline in payrolls in 4 1/2 years.
As of Friday’s
settlement in the Chicago pits, the federal funds futures
contract implied a 12% chance that Federal Reserve
policymakers will raise the federal funds rate a quarter
point when they meet on Aug. 22. In other words, there’s an
88% probability that the Fed will stand pat. As of
Thursday’s settlement, the futures market had priced in a
24% chance of a hike. If you’re interested in learning how
to use the futures pit to forecast the Fed, check out my
on the fed funds futures contract.
A raft of
financial stocks benefited from analyst upgrades and bullish
comments, including Bank of America
(
BAC |
Quote |
Chart |
News |
PowerRating), FleetBoston
Financial
(
FBF |
Quote |
Chart |
News |
PowerRating), Knight/Trimark
(
NITE |
Quote |
Chart |
News |
PowerRating), and
Washington Mutual
(
WM |
Quote |
Chart |
News |
PowerRating).
For more insight
into Friday’s performance of the rate-sensitive stocks, be
sure to check out Kevin Marder’s
In the tech arena,
the Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating) gained 1.5%, Internet
Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating) 1.2%, Dow Jones
Telecommunications iShares
(
IYZ |
Quote |
Chart |
News |
PowerRating) 1.1%.
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It was a mixed bag
for the tradable tech funds, though. The Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating) lost 2.7%, the Telecom HOLDR
(
TTH |
Quote |
Chart |
News |
PowerRating), and the
Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating) 0.5%.
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The Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating) added 1.5%, notching its fifth straight gain. The
industry got a boost earlier this week from robust Q2
results reported by Protein Design Labs
(
PDLI |
Quote |
Chart |
News |
PowerRating) and
Chiron
(
CHIR |
Quote |
Chart |
News |
PowerRating).
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