Sector Week-in-Review: Utilities Showing Momentum

Nick Perry (Schaeffer's Investment Research) submits: Last week, we saw a skew to the upside with clean energy, homebuilders, energy exploration, semiconductors, and silver leading the charge.

This week we see a slight bias to the downside (click to enlarge):

Semiconductors struggled this week as we find near uniform underperformance from the iShares GS Semiconductor (IGW), Semiconductor HOLDRS (SMH), and PowerShares Semiconductors (PSI). At the top of the list, we find that silver, health care, natural resources, utilities, energy, pharmaceutical, biotechnology, and utilities all gained between two and three percent.

For a longer-term perspective, the bullets below show how the ETFs listed above have faired during the past six months, prior to this week.

Prior Six-Month Returns for This Week's Top Performing Sector Exchange-Traded Funds:

* SPDR-Utilities (XLU) +12.2%
* Utilities HOLDRS (UTH) +12.6%
* iShares DJ U.S. Utilities (IDU) +11.6%
* Oil Service HOLDRS (OIH) -18.4%
* PS Biotechnology & Genome (PBE) +2.3%
* Pharmaceutical HOLDRS (PPH) +10.8%
* iShares DJ U.S. Energy (IYE) -5.2%
* PS Utilities (PUI) +13.0%
* iShares GS Natural Resources (IGE) -9.7%
* SPDR-Health Care (XLV) +6.4%
* iShares Silver Trust (SLV) n/a
* iShares DJ U.S. Healthcare (IYH) +6.3%

Prior Six-Month Returns for This Week's Bottom Performing Sector Exchange-Traded Funds:

* iShares DJ U.S. Financial Services (IYG) +6.5%
* iShares GS Software (IGV) +7.8%
* PS Hardware & Consumer Electronics (PHW) -1.1%
* PS Software (PSJ) +3.6%
* PS Aerospace & Defense (PPA) +1.4%
* SPDR Homebuilders (XHB) -23.2%
* Wireless HOLDRS (WMH) -5.9%
* PS Networking (PXQ) -6.2%
* iShares GS Networking (IGN) -12.1%
* PS Semiconductors (PSI) -11.6%
* Semiconductor HOLDRS (SMH) -4.9%
* iShares GS Semiconductor (IGW) -5.1%

In last week's commentary, I discussed how the strong performance by semis, housing, and networking had me interested as part of the "beaten up groups" theme. If you look over the graph above, you see that each of those groups lost ground this week. While that isn't exactly what I was looking for (to say the least), this week's pullback wasn't enough to dissuade me from that theme. However, it is important to pay attention to where the money is flowing so I will be keeping a close eye on how this progresses.