ETF Momentum Gainers and Losers: Week of April 27

Momentum Gainers

Coal

Market Vectors Coal (KOL)

Coal stocks delivered better than expected earnings last week and set off huge rallies across the sector. Massey Energy (MEE; 4.92 percent of assets) popped 32.5 percent last week, helped by an earnings announcement that calmed investor fears. Massey reported an increase in sales but announced cost cuts to deal with slack demand and in anticipation of further economic slowdown. Patriot Coal (PCX; 1.50 percent) jumped 21.90 percent on Friday following its earnings announcement, which showed $0.41 per share profit in the first quarter of 2009. Patriot Coal lost $0.06 per share in the first quarter of 2008 and analysts expected a loss of $0.54 per share. Patriot Coal gained 49.7 percent for the week.

KOL gained 12.49 percent last week.

Steel

Market Vectors Steel (SLX)

Steel demand is off sharply and buyers are running down inventory and waiting for lower prices. Many investors are looking for increased demand from China and India, but the drop-off in developed countries is palpable. Last week, U.S. Steel (X; 4.22 percent) said it would delay payments for retiree health insurance, among other cost saving and capital raising measures. Nevertheless, investors are in a positive mood and shun negative outlooks. SLX added 4.16 percent last week and gained 27.20 percent in the past month.

Oil Services

PowerShares Dynamic Oil & Gas Services (PXJ)

iShares Dow Jones U.S. Oil Services (IEZ)

Hard assets stocks are back on the move, and oil is no exception. Crude oil has stayed within small range around the $50 level for almost two months now, and general optimism has investors back in the sector—though it shows signs of slowing. PXJ added 2.03 percent last week and IEZ climbed 0.47 percent. IEZ has more than 20 percent of assets in Schlumberger (SLB), however, and the stock received a very favorable mention in Barron’s over the weekend (“Schlumberger Looks Like a Potential Gusher”) that had shares up more than 6 percent in early trading, which pushed IEZ up more than 3 percent.

Momentum Losers

20+ Year Treasuries

iShares Barclays 20+ Year Treasury (TLT)

SPDR Long Term Treasury (TLO)

The Federal Reserve’s Treasury intervention was supposed to push prices up (and yields down), but the opposite is happening. TLT lost 3.44 percent last week and TLO fell 1.94 percent; both are down more than 5 percent in the past month. One theory for the drop is that the Fed is providing liquidity for investors looking to exit Treasuries. Another is the catch-22 scenario, whereby successful Fed actions restore confidence and lead investors out of Treasuries and into riskier assets, and potentially leading to another housing crash in 2010.

Whatever the reason, the fundamental backdrop is that investors, foreign and domestic, are worried about the size of U.S. deficits, which are on pace to exceed 15 percent of GDP this year. At the height of the Reagan tax cut/defense build-up, the deficit was “only” 5 percent of GDP—but the economy would soon grow by 5 percent a year. Today, forecasts are less optimistic, while entitlement programs are heading into deficit and tax revenues are declining.

Precious Metals

iShares Silver Trust (SLV)

PowerShares DB Silver (DBS)

iShares COMEX Gold (IAU)

SPDR Gold Shares (GLD)

PowerShares DB Precious Metals (DBP)

Treasuries and precious metals absorbed capital in search of safe havens during the most volatile periods of the financial crisis, but so far, gold has held up better than Treasuries. Gold prices were down over the past month and lost ground last week. IAU fell 3.02 percent for the week and 4.42 percent in the past month. Silver fared better; it dropped 2.84 percent and 4.13 percent, respectively, over the same periods.

Natural Gas

US Natural Gas (UNG)

iPath Natural Gas (GAZ)

The buzz around low natural gas prices continues, but supply continues to come online and potential supply remains substantial if companies reduce production today. Egypt increased production, and a network of pipelines will link the region with Europe and the Middle East. Local factors in the U.S. influence natural gas prices to a greater degree than they affect oil prices, but liquid natural gas from abroad will begin to internationalize the market. In the short-run, however, natural gas prices are tied to economic activity. Prices are low, but so is demand.

UNG and GAZ gained 4.95 percent and 4.00 percent, respectively, last week.