Tech ETFs Launch, Defensives Retreat
The tradable tech funds came alive
Thursday as the market rewarded positive earnings news by bellwethers like
Microsoft, Nokia and Texas Instruments. The defensive exchange-traded funds
counted among the few retreating ETFs.
The Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)
surged 16.3%, the day’s sharpest gain among the exchange-traded
funds.
Among the HOLDR’s components, Intel
(
INTC |
Quote |
Chart |
News |
PowerRating)
rallied 9.8%, Texas Instruments
(
TXN |
Quote |
Chart |
News |
PowerRating) 24.1%, Applied Materials
(
AMAT |
Quote |
Chart |
News |
PowerRating)
20.1%, Analog Devices
(
ADI |
Quote |
Chart |
News |
PowerRating) 16.7%, Broadcom
(
BRCM |
Quote |
Chart |
News |
PowerRating) 11.8%.
Despite the gains, the damage in many
of the semis remains deep. Volume was less than impressive in many issues.
Broadcom has one of the more constructive chart patterns, and it has a ways to
go before offering an entry for the intermediate-term momentum trader.
The Internet Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating)
rose 10.0%, the Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating) 9.5%, the Dow Jones
Technology iShares
(
IYW |
Quote |
Chart |
News |
PowerRating) 9.1%, the Technology SPDR
(
XLK |
Quote |
Chart |
News |
PowerRating) 8.8%, the
Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating) 8.7%, the Internet HOLDR
(
HHH |
Quote |
Chart |
News |
PowerRating) 7.4%.
Among the Internet Infrastructure
HOLDR’s components, Exodus Communications
(
EXDS |
Quote |
Chart |
News |
PowerRating) pulled ahead 13%,
RealNetworks
(
RNWK |
Quote |
Chart |
News |
PowerRating) 27%, Vignette
(
VIGN |
Quote |
Chart |
News |
PowerRating) 16%, Kana Communications
(
KANA |
Quote |
Chart |
News |
PowerRating)
25%.
The rate-sensitive ETFs shared in the
good times. The Financial SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating) added 4.7%, the Dow Jones Financial
iShares
(
IYF |
Quote |
Chart |
News |
PowerRating) 3.8%, the Dow Jones Financial Services iShares
(
IYG |
Quote |
Chart |
News |
PowerRating) 3.4%,
the Regional Banking HOLDR
(
RKH |
Quote |
Chart |
News |
PowerRating) 3.4%.
On the downside, money flowed out of
the defensives. The Consumer Staples SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating) lost 1.8%, the Dow Jones
Consumer Non-Cyclical iShares
(
IYK |
Quote |
Chart |
News |
PowerRating) 1.8%, the Dow Jones Healthcare iShares
(
IYH |
Quote |
Chart |
News |
PowerRating)
1.5%, the Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating) 1.1%.
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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