Tech ETFs Pull Back
The tech-focused tradable funds
Wednesday pulled back as the Nasdaq backed and filled following Tuesday’s sharp
rally. The declines were broad, affecting to a lesser extent exchange-traded
funds in financial, consumer staples, healthcare, and industrial sectors.Â
The B2B Internet HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating) gave
back 5.9%, the day’s biggest among the exchange-traded
funds
Among the HOLDR’s components, Ariba
(
ARBA |
Quote |
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PowerRating)
forfeited 11.0%. Ariba has a 42% weighting in the basket of business-to-business
stocks, making it the heaviest component in the HOLDR. CheckFree Holdings
(
CKFR |
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News |
PowerRating)
lost 8.6%. Agile Software
(
AGIL |
Quote |
Chart |
News |
PowerRating) swam against the tide, adding 4.6%.Â
The Internet HOLDR
(
HHH |
Quote |
Chart |
News |
PowerRating) lost
5.1%, the Internet Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating) 4.5%, the Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)
4.1%, the Nasdaq 100 Tracking Stock
(
QQQ |
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Chart |
News |
PowerRating) 3.6%, the Technology SPDR
(
XLK |
Quote |
Chart |
News |
PowerRating)
2.8%.
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 to 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.
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.