Tech ETFs Pull Back, Defensives Bleed

  • January 4, 2001
  • Loren Fleckenstein

The tradable tech funds pulled back
Thursday as their component stocks digested the prior session rally. Money
continued to rotate out of defensive utility, healthcare, and consumer staples
sectors.   

The B2B Internet HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating)
gained 7.7%, the day’s sharpest gain among the exchange-traded
funds. 

Among its components, Akamai
(
AKAM |
Quote |
Chart |
News |
PowerRating)
pulled back 13.9%, BroadVision
(
BVSN |
Quote |
Chart |
News |
PowerRating) 16.3%, Exodus
(
EXDS |
Quote |
Chart |
News |
PowerRating) 14.1%,
VeriSign
(
VRSN |
Quote |
Chart |
News |
PowerRating) 4.6%.

Among the other tech-focused ETFs, the
B2B Internet HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating) receded 9.4%, the Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating) 5.6%, the
Dow Jones Internet iShares
(
IYV |
Quote |
Chart |
News |
PowerRating) 5.3%, the Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)
2.7%, the Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating) 2.5%.

The losses continued in the
defensives. The Dow Jones Utility iShares
(
IDU |
Quote |
Chart |
News |
PowerRating) fell 6.7%, the Utility HOLDR
(
UTH |
Quote |
Chart |
News |
PowerRating) 5.0%, the Dow Jones Healthcare iShares
(
IYH |
Quote |
Chart |
News |
PowerRating) 4.9%, the
Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating) 4.4%, the Consumer Staples SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating) 4.0%.

The top field of all charts in this
commentary uses a logarithmic price scale and displays a 50-day price average in
red. In the second field, a
blue relative strength line represents the displayed security’s price
performance relative to the S&P 500. The third field displays vertical daily
volume bars in black with a 50-day moving average in blue for volume.

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 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. 

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.

 

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