Nick Perry (Schaeffer's Investment Research) submits: Last week we saw a firm bias to the upside as more than 90 percent of my list showed a gain. This week we find that the positive momentum continued:
Nearly three-quarters of my list gained ground this week but there wasn't a standout leader. In other words, it looks like just generalized buying with the iShares GS Networking (IGN), streetTRACKS Gold (GLD), Utilities HOLDRS (UTH), SPDR-Utilities (XLU), and iShares Silver Trust (SLV) gravitating to the top of the list. In broad strokes, utilities, metals, realty, energy, and select technologies funds saw money flow toward them.
At the bottom of the list we find that the SPDR Homebuilders (XHB) was the standout decliner while milder weakness was seen in consumer-related funds as well as biotech, drugs, transports, and select technologies funds.
One note of interest is that two of last week's top three performing ETFs, the SPDR Homebuilders (XHB) and iShares Dow Jones Transportation Average (IYT), are lagging this week. In my previous column we saw that both were pushing into overbought conditions. As I said then, high reading of the short-term RSI doesn't mean that the uptrend is over ("staying overbought" is often a sign of further advances) but it does put me on the alert for pullbacks or consolidations.
This week's sharp drop in the XHB has allowed the fund to "work off" its overbought condition but as you can see below, the ETF still remains above its 50-day moving average. Another point of interest is that the two utility ETFs listed below are both reaching "extreme" overbought conditions so it will be worth watching how they fare next week. (Note - details about the indicators used in these charts can be found at the bottom of this column.)
Each chart features the 50-day moving average and a 9-day relative strength index (RSI). I use the moving average (the green line) as a simple way to gauge trends and the RSI (red line below the price) suggests whether the ETF is overbought or oversold. (More information about using the RSI can be found here.)
Index performance this week: