More Defense-To-Tech Rotation
The tradable tech funds followed
through Thursday as their component stocks advanced on robust volume, suggesting
a return of smart money into the battered sector. Cash flows into tech spelled
outflows from the defensives, evidenced in declines in the tradable funds
focused on healthcare, consumer staples and utilities.
The B2B Internet HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating) 11.1%
for the second day in a row, scoring the sharpest gain among the exchange-traded
funds. The Internet Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating) gained 8.8%,
the Internet Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating) 6.5%.
The Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating) rose
5.5%. For more on the action in semis, see Kevin Marder’s latest Marder
on the Market commentary.
The Software HOLDR
(
SWH |
Quote |
Chart |
News |
PowerRating), which
began trading on Sept. 27, gained 5.3%. There is some bullish chart action in a
number of the software companies, including PeopleSoft
(
PSFT |
Quote |
Chart |
News |
PowerRating) and Rational
Software
(
RATL |
Quote |
Chart |
News |
PowerRating). I analyze the charts of both stocks in my latest Trading
The News.
Among the other tech-focused ETFs, the
Dow Jones Internet iShares
(
IYV |
Quote |
Chart |
News |
PowerRating) rose 4.3%, the Dow Jones Telecommuications
iShares
(
IYZ |
Quote |
Chart |
News |
PowerRating) 3.1%.
On the downside, the Dow Jones
Utilities iShares
(
IDU |
Quote |
Chart |
News |
PowerRating) fell 3.9%, the sharpest loss among the ETFs. The
Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating) lost 3.0%, the Dow Jones Chemical iShares
(
IYD |
Quote |
Chart |
News |
PowerRating)
3.0%, the Basic Industries SPDR
(
XLB |
Quote |
Chart |
News |
PowerRating) 2.7%, the Utilities SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating)
2.4%, the Consumer Staples SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating) 2.0%, the Dow Jones Healthcare iShares
(
IYH |
Quote |
Chart |
News |
PowerRating) 1.6%.
The top field of all charts in this
commentary uses a logarithmic price scale and displays a 50-day price average in
red. 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.
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.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.
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