Weekly ETF Rewind: Sectors Beginning to Diverge in Performance

Last week's diminutive S&P500 (SPY) returns, up +0.3%, belied the significant recovery attempt and failure of the majors, putting in lower May highs across the board. The real gainers were International [(EFA) +5.2%] and Emerging Market [(EEM) +5.6%] stocks, boosted by higher Commodities [(DBC) +5.0%] and a weakened US Dollar [(UUP) -3.6%]. In contrast, long-term Treasuries (TLT) fell rather hard, down about -4.6%.

(Click Image to Enlarge/ Glossary)

Week Twenty-Two of 2009 features the following busy earnings and economic calendar, including Preliminary GDP on Friday:

• Yahoo! - U.S. Economic Calendar
• Yahoo! - U.S. Earnings Calendar

For now, it's good to see sectors and asset classes begin to diverge in performance rather than all trading as one. While our economic woes are far from over and the outlook remains cloudy, at least investors are able to choose their battles. Enjoy Your Long Weekend!

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Comments

[RiskReturnO...:]

Money continues to pile onto all the Inflation trades -- DBA, DBO / USO, TBT, GLD, FXA / DBV.

Until volume dries up, best strategy is to maintain long positions in anything tied to weak US dollar.

Another indicator is new mutual funds being created to allow passive retail investors to play this trend. For example, Fidelity started a Global Commodity Funds ... this will be great to get the passive retail investors (those who don't already trade GLD, DBA, USO, TBT, FXA / DBV) involved ....

Watch for increased money flow into these mutual funds ... watch for brokerage newsletters to highlight these funds as ways to protect investors in rising inflation environment ... watch for new mutual funds that slice and dice this macro sector into smaller pieces ...

Once all these have been checked off, perhaps it will be time to jump off the train (cover long positions) ... I think we have a long way to go before this happens, so enjoy the ride!

May 25 08:37 PM