Real Estate Sector Asserts Itself

Nick Perry (Schaeffer's Investment Research) submits: Last week we saw an upside bias with housing and semiconductors leading. This week we find another skew to the upside:

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Despite the Thanksgiving holiday-shortened week, we still have some large movers. Realty funds, took the lead with moves in excess of five percent. The iShares DJ U.S. Real Estate Fund (IYR), Wilshire REIT Fund (RWR), and iShares C&S Realty Majors Fund (ICF) are all at new highs now. Silver and materials-related funds also had a strong week. Drugs and biotech lagged the action with minor losses.

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

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

* iShares C&S Realty Majors (ICF) +23.8%
* Wilshire REIT Fund (RWR) +21.8%
* iShares DJ U.S. Real Estate (IYR) +20.5%
* iShares Silver Trust (SLV) -2.2%
* SPDR-Materials (XLB) +7.0%
* iShares DJ U.S. Basic Materials (IYM) +4.3%
* Oil Service HOLDRS (OIH) -6.0%
* streetTRACKS Gold (GLD) -6.9%
* iShares GS Natural Resources (IGE) +3.3%
* iShares GS Networking (IGN) +3.9%
* PS Semiconductors (PSI) -0.8%
* Internet HOLDRS (HHH) +5.9%

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

* iShares DJ U.S. Healthcare (IYH) +10.7%
* SPDR Dividend ETF (SDY) +11.1%
* SPDR-Consumer Staples (XLP) +9.3%
* SPDR-Health Care (XLV) +10.7%
* iShares DJ Select Dividend (DVY) +13.4%
* iShares Nasdaq Biotech (IBB) +16.3%
* Regional Bank HOLDRS (RKH) +7.4%
* Retail HOLDRS (RTH) +5.7%
* PS Pharmaceuticals (PJP) +16.5%
* Biotech HOLDRS (BBH) +12.0%
* PS Biotechnology & Genome (PBE) +21.8%
* Pharmaceutical HOLDRS (PPH) +11.5%

As far as overall takeaways for the week, I don't have much to offer in terms of concrete conclusions. I look at relative strength/weakness as a way to gauge where money is flowing in the market. The downside to this approach is that light trading weeks, such as this, can lead to whipsaw movements. So, I tend to put less emphasis on the action. I do think it is important to note what happened this week, but we will need to see how this continues into next week before drawing any conclusions.