ETF Momentum Gainers and Losers

Momentum Gainers

Financials

PowerShares FTSE RAFI Financials (PRFF)

SPDR KBW Bank (KBE)

iShares Dow Jones U.S. Financial Services (IYG)

SPDR Financial (XLF)

A string of strong earnings reports from financial companies helped this sector continue its recuperation. For the week, PRFF added 9.44 percent, KBE increased 9.74 percent, IYG climbed 3.93 percent, and XLF rose 4.52 percent. That brings their one-month returns to 26.31 percent, 22.56 percent, 18.51 percent, and 18.07 percent, respectively.

Treasury will release the results of stress tests on U.S. banks in early May, but investors are already anticipating the results. Nouriel Roubini argues that the economic assumptions used in the stress test are too optimistic, and that the Treasury’s worst-case scenario is actually better than the real economy. Banks may rally as government and media hype a positive report, but if Roubini is right about the economy, there will eventually be another crash in this sector.

Solar

Market Vectors Solar (KWT)

Solar stocks rallied strongly since March 9, with Suntech Power (6.90 percent of assets) up 180 percent. Another Chinese solar producer, Yingli (4.45 percent), gained 90 percent.

Number-one holding Solarworld (10.45 percent of assets) advanced more than 50 percent, while number two and three First Solar (8.28 percent) and Sun Power (8.17 percent) climbed about 40 and 20 percent, respectively. Over the same period, KWT went up 60 percent.

Copper

iPath Copper (JJC)

Last week, the Telegraph revealed the reason for copper’s recent rally—China has been purchasing far more of the metal than required by their consumption rates. JJC has gained 45.31 percent in the past three months, more than double the silver funds, its nearest commodity ETF competitor. In the past month, JJC advanced 24.48 percent, second to iPath Nickel (JJN), up 30.39 percent.

China’s motives are unclear for now. The simplest explanation is that China is stockpiling for future growth, but some speculate this could be part of a move toward a hard-asset based currency. One common thread between both motives, however, is the expectation of a weaker U.S. dollar and/or higher commodity prices.

Momentum Losers

UltraShorts

ProShares UltraShort Financials (SKF)

ProShares UltraShort Real Estate (SRS)

The ongoing rally in the financial and real estate sectors devastated the leveraged shorts, with SKF plunging 9.60 percent last week, and SRS shedding 16.39 percent. SKF has a two-week loss of 33.60 percent and a one-month loss off 44.49 percent. SRS declined 40.60 and 50.42 percent over the same period.

Gold

iShares COMEX Gold (IAU)

PowerShares DB Gold (DGL)

SPDR Gold Shares (GLD)

After rising in the wake of the Federal Reserve’s quantitative easing policy, gold has slowly moved lower, falling to the $860s on Friday. After a gain at the open, gold is trading in the $870s this morning.

Rumors of an IMF gold sale have markets skittish, and some technical analysts expect a severe correction before gold resumes its advance. Meanwhile, those expecting more deflation believe gold can go a lot lower, along with the price of everything else in the economy. In April, investors sold about 20 tons out of SPDR Gold Shares (GLD), the largest gold ETF with more than 1,100 tons of the metal.

Dollar and Yen

PowerShares DB U.S. Dollar Bullish Fund (UUP)

CurrencyShares Japanese Yen (FXY)

Currency funds are losing momentum relative to rising equity markets, but the U.S. dollar index has been stronger of late, with UUP gaining 2.06 percent in the past month. One of the few currencies to weaken against the greenback was the Japanese yen. FXY has declined 3.19 percent in past month.

Over the past week, the dollar has shown signs of renewed strength. UUP rallied 0.43 percent, but the yen also rebounded and FXY gained 1.16 percent. Most of the dollar index strength came against the euro—CurrencyShares Euro (FXE) fell 1.09 percent.

Comments

[Connie Derrick:]

thanks for adding this ETF momentum information.

Apr 21 10:54 AM