Net ETFs Lead Broad Rally
The tradable Internet managed a broad
rally Wednesday while the industrial and cyclical funds also behaved well.
The B2B Internet HOLDR SPDR
(
XLU |
Quote |
Chart |
News |
PowerRating)
rose 5.1%, the day’s sharpest gain among the exchange-traded
funds.
Among the HOLDR’s components, Agile
Software
(
AGIL |
Quote |
Chart |
News |
PowerRating) gained 16.8%, Commerce
One
(
CMRC |
Quote |
Chart |
News |
PowerRating) 13.7%, PurchasePro.com
(
PPRO |
Quote |
Chart |
News |
PowerRating) 17.4%.
The Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)
4.9%, the Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating) 4.4%, the Internet Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating)
3.0%, the Internet Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating) 2.0%.
As for the Old Economy ETFs, the
Cyclicals/Transportation SPDR
(
XLY |
Quote |
Chart |
News |
PowerRating) rose 5.1%, the Dow Jones Chemical
iShares
(
IYD |
Quote |
Chart |
News |
PowerRating) 3.3%, the Dow Jones Consumer Cyclical iShares
(
IYC |
Quote |
Chart |
News |
PowerRating) 2.5%.
On the downside, the Internet HOLDR
(
HHH |
Quote |
Chart |
News |
PowerRating)
was out of step with its brethren, falling 5.0%, the day’s sharpest loss among
the ETFs. The basket of Internets was pressured by its two largest components,
America Online
(
AOL |
Quote |
Chart |
News |
PowerRating) dropping 7.1%, Yahoo
(
YHOO |
Quote |
Chart |
News |
PowerRating) 4.6%. Inktomi
(
INKT |
Quote |
Chart |
News |
PowerRating),
another component, lost 11.0%.
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.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 href=”/.site/stocks/education/strategies/05262000-6129.cfm”>Moving
Average Crossovers. I also recommend newcomers read my tutorial, href=”/.site/stocks/education/strategies/06272000-6815.cfm”>Trading
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.