Techs Bounce, Defensives Ease
At last, tech stocks bounced Friday,
enabling a broad rally among the tech and growth exchange-traded funds while
ETFs focused on defensive pharmaceutical, utility and consumer staples areas
eased.
Remain on guard. As I observe in my href=”/.site/stocks/commentary/lfatshow/11302000-10411.cfm”>Trading
The News column, market sentiment gauges and tape action suggest that Friday’s
bounce could be a bull trap. The mutual fund complex have a lot of cash to put
to work if they choose. If they do, we’ll see it in tape and in the stocks.
Until then, don’t leap to bullish conclusions.
The Dow Jones Internet iShares
(
IYV |
Quote |
Chart |
News |
PowerRating)
rose 4.2%, the day’s biggest gain among the U.S.-focused exchange-traded
funds.
The top field of all charts in this
commentary uses a logarithmic price scale and displays a 50-day price average in
red. In cases where the displayed security has traded long enough, the top field also
will exhibit a 200-day moving price average in black. 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.
Among the index share’s components,
BEA Systems
(
BEAS |
Quote |
Chart |
News |
PowerRating) jumped 8.6%, Exodus Communications
(
EXDS |
Quote |
Chart |
News |
PowerRating) 6.6%.
The Internet Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating)
gained 4.1%, the Russell 2000 Growth iShares
(
IWO |
Quote |
Chart |
News |
PowerRating) 3.5%, the Biotech HOLDR
(
BBH |
Quote |
Chart |
News |
PowerRating)
3.3%, the Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating) 3.2%.
Old Economy ETFs had a decent day as
well. The Dow Jones Basic Materials iShares
(
IYM |
Quote |
Chart |
News |
PowerRating) rose 4.0%, the Basic
Industries SPDR
(
XLB |
Quote |
Chart |
News |
PowerRating) 3.2%, the Dow Jones Chemical iShares
(
IYD |
Quote |
Chart |
News |
PowerRating) 2.3%.
On the downside, the Pharmaceutical
HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating) lost 2.2%, the Dow Jones Healthcare iShares
(
IYH |
Quote |
Chart |
News |
PowerRating) 2.1%, the
Utilities SPDR
(
XLU |
Quote |
Chart |
News |
PowerRating) 1.9%, the Utility HOLDR
(
UTH |
Quote |
Chart |
News |
PowerRating) 1.9%, the Consumer
Staples SPDR
(
XLP |
Quote |
Chart |
News |
PowerRating) 1.5%.
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 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.