More Rotation On Tech Pullback
Techs pulled back
Wednesday, which was acceptable behavior after the sharp
bounce-back gains on Monday and Tuesday. True to form, some
defensive and cyclical areas rose with inflows of rotating
cash.
As I’ve pointed
out in recent columns, this is a wait-and-see time. Stocks
need time to convalesce and rebuild. It’s hard to find
stocks, industries, sectors, and funds that are in sustained
uptrends or completing constructive bases.
One of the few is
the Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating). This Amex-listed fund
tried to stage a breakout, making an intraday high before
settling back for a closing high of 93 7/8, in the upper
half of the day’s trading range between a session low of 90
and a session high of 96 1/4. The Pharmaceutical HOLDR has
advanced nearly 34% from its March 7 intraday low.
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The Consumer
Services SPDR
(
XLV |
Quote |
Chart |
News |
PowerRating) rose 2.6%, the strongest percentage
performance on Wednesday of the exchange-traded funds that
track U.S. industry groups and indexes. This fund has
weak-to-mediocre relative strength, depending on which RS
time frame that you look at.
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The Consumer
Staples SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating) rose 1.1%. A possible pivot point is
the recent resistance at 23 15/32.
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The biggest-losing
U.S. stock-based tradable funds, by percentage, were the
Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating) (-4.4%), the Technology SPDR
(
XLK |
Quote |
Chart |
News |
PowerRating)
(-3.2%), the Internet Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating) (-3.2%),
the B2B HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating) (-2.3%), and the Nasdaq 100 Index
Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating) (-2.0%).
The exception
among the tech funds was the Telecom HOLDR
(
TTH |
Quote |
Chart |
News |
PowerRating), which
continued to edge higher from the lows set on Monday. The
bottom reversal looks constructive. Note how the stock
closed near the top of the day’s trading range and above the
open on April 7. The move also came on surging volume —
another positive.
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Holding Company
Depository Receipts, or HOLDRs, are financial products of
Merrill Lynch and represent holdings in a fixed basket of
stocks. In that, they differ from other exchange-traded
funds, such as the S&P Depository Receipts and World
Equity Benchmarket Shares. The SPDRs and WEBSs track
different indexes, and their stock holdings evolve to keep
in sync with the funds’ indexes.
An exchange-traded
fund combines traits of stocks and mutual funds. Like mutual
funds, an ETF represents diversified ownership in different
stocks, greatly reducing company-specific risk. Like stocks,
ETFs trade on exchanges. Nearly all of them, in fact, now
trade on the American Stock Exchange. Their share prices are
quoted throughout the day, which enables traders to take
advantage of intraday price moves.
For an
introduction to these securities, check out the
FundMovers.com
Subscribers to TradingMarkets.com’s TradersWire intraday
sector-alert service can learn how to use this service to
trade ETFs. For more on that, please read Eddie Kwong’s
lesson on trading exchange-traded funds.
here.