Tech ETFs Gain, Defensives Shaky
The tech-focused exchange-traded funds
Thursday moved ahead on real volume.Â
The
Software HOLDR
(
SWH |
Quote |
Chart |
News |
PowerRating) gained 5.4%, the day’s sharpest gain among the tradable
funds. The Dow Jones Internet iShares
(
IYV |
Quote |
Chart |
News |
PowerRating) gained 4.7%, the
Internet Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating) 4.5%, the Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating)
5.5%, the Dow Jones Technology iShares
(
IYW |
Quote |
Chart |
News |
PowerRating) 4.1%, the B2B Internet HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating)
3.9%, the Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating) 3.7%.
Despite
the moves into tech, we didn’t see commensurate declines in the defensive ETFs
such as the Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating), which gave up 1.0%, or the Consumer
Staples SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating), which slipped a mere 0.2%. However, a closer look at the
chart seems to suggest that institutional cash is trying to back out of the
defensive names without precipitating a run. Notice the low volume on the
bounce. Â
06
From
time to time, I get letters from TradingMarkets asking for details on the
component stocks of the exchange-traded funds. Here are some useful sites for
you:Â
For the iShares
series of ETFs, go to www.ishares.com.
On the left side, you’ll see links to all the individual iShares funds. For the
HOLDRs, check out www.holdrs.com. You’ll
find a variety of tools for these baskets. To dig into the component stocks,
click on the link labeled Holders Outstanding.
With
the exception of the Telebras HOLDR
(
TBH |
Quote |
Chart |
News |
PowerRating), all the exchange-traded funds are
listed on the American Stock Exchange. The Telebras HOLDR resides on the New
York Stock Exchange. On the Amex site, www.amex.com,
you’ll find links to Index Shares and to HOLDRS.
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.
ETFs come in two categories: index shares and HOLDRs. As you would guess by their names, index shares track various indices. The Qubes
(
QQQ |
Quote |
Chart |
News |
PowerRating) track the Nasdaq 100, the Spiders
(
SPY |
Quote |
Chart |
News |
PowerRating) track the S&P 500, etc. As a result, their components change to reflect the capitalization weightings of the stocks in their tracking indices. The HOLDRs, created by Merrill Lynch, are fixed baskets of stocks. Their components do not change, save in the event of a merger, acquisition or spin-off affects one or more of their components.Â
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.