Seeking Alpha
Momentum, newsletter provider, ETF investing, short-term horizon
Profile| Send Message|
( followers)  

With the first month of 2013 finished, the market has gotten off to a strong start. This normally indicates a strong year is ahead of us, based upon historical data of the S&P 500 (SPX). We took a look at which Exchange Traded Funds (ETFs) are outperforming the market, to see what sectors may be the leaders of 2013. A lot of Energy related names show up on the list - specifically in the Crude Oil and Oil Services fields.

Here are 10 ETFs that are outperforming the SPYders over the first month of 2013 - all of these are optionable with average daily volume over 100k. No Ultras or Leveraged ETFs here, we're looking for pure sector plays that are comparable to the SPY.

Outperforming Energy ETFs

(click to enlarge)

You can see in graphical form below these ETFs when compared to the SPY in terms of performance in 2013 - the 2 clear leaders are iShares Oil Equipment & Services (NYSEARCA:IEZ) and Market Vectors Oil Services (NYSEARCA:OIH):

2013 Relative Performance Chart
(click to enlarge)

Taking a look at the Top Holdings of IEZ & OIH, you can see that they are very similar - including that both have large holdings in Schlumberger (NYSE:SLB). This is something to keep in mind when you look to invest in or trade an ETF - in this case these holdings are so similar that only 1 of these needs to be examined further. We chose OIH because its options are much more liquid. But certainly keep in mind the influence that SLB and those other top stock holdings will have on the performance of these ETFs going forward.

Top 10 Holdings
(click to enlarge)

Going back a bit longer in perspective, you can see below that since 2012 these ETFs are not matching the strong performance of the SPY:

SPY IEZ OIH Relative Performance Since 2012
(click to enlarge)

Delving closely into the OIH charts, let's take a look first at the longer-term Weekly one. You can see that OIH -- as well as Crude Oil (NYSEARCA:USO) and the whole sector -- hasn't even come close to recovering the "bubble" levels of 2008. Longer-term, there is a higher lows pattern forming, as well as an overall narrowing price range. This indicates a breakout will be coming, although it may not be imminent - the higher lows and overall technical analysis picture indicates that the direction of the breakout/volatility increase will be to the upside (although that isn't a certainty).

OIH Weekly Chart
(click to enlarge)

Zooming closer on the OIH Daily chart, you can see below that we're around a key trendline level that has marked highs recently - this is possible resistance. Definitely something to keep an eye on. The overall picture here is of strength - Percent R is very strong currently for example. The higher lows since last June is also positive, and we're on the verge of taking out the September highs - confirming a move above those could lead to a run to the 46 area at least.

OIH Daily Chart
(click to enlarge)

The emergence of Energy and Crude Oil related ETFs and stocks in 2013 may well be an important story for traders & investors, and this is one that has not received a great deal of attention in the mass financial media.

Source: Oil Services Emerging In 2013