Fear / Risk ETFs Simultaneously Hit 52-Week Highs

 |  Includes: FXF, FXY, GLD, IEZ, JKE, PXI, QQQ, SGOL
by: Gary Gordon

How confident should you be about Democrats and Republicans reaching an accord on raising the debt ceiling? Confident enough.

Don’t get me wrong. I always have my stop-limit orders protecting key ETF positions. It’s just that the bond market as well as the stock market both agree ... a deal will get done.

Ten-year treasury yields are still offering a historically paltry 3.0%. What’s more, bond ETF investors still cherish low-yielding income positions. Even lower-than-average summertime volume is suggesting that few are ready to sell in panic. (At least not yet.)

Perhaps the most remarkable thing that is occurring? Simultaneously, cyclical ETFs and fear-based ”risk off” ETFs are hitting new 52-week highs.

ETFs Hitting New 52-Week Highs On 7/25/2011
Approx YTD %
Cyclical “Risk On”
PowerShares NASDAQ 100 (NASDAQ:QQQ) 9.6%
PowerShares Dynamic Energy (NYSEARCA:PXI) 21.9%
iShares DJ U.S. Oil Equip and Services (NYSEARCA:IEZ) 22.2%
iShares Morningstar Large Growth (NYSEARCA:JKE) 8.9%
Fear-Based “Risk-Off”
SPDR Gold Trust (NYSEARCA:GLD) 13.4%
CurrencyShares Japanese Trust (NYSEARCA:FXY) 3.5%
CurrencyShares Swiss Franc (NYSEARCA:FXF) 15.6%
ETFS Physical Swiss Gold (NYSEARCA:SGOL) 13.4%
Click to enlarge

The optimists see strong corporate earnings, particularly from technology bellwethers, and they’re not selling. They like the earnings prospects for components of the NASDAQ 100 QQQ (QQQ) as well as components of energy service providers in iShares DJ Oil Equipment and Services (IEZ).

At the very same time, there are investors who feel threatened by the European sovereign debt crisis, emerging market inflation, the U.S. debt ceiling debate as well as a tired U.S. economy. They’re seeking safety in funds like CurrencyShares Swiss Franc (FXF) and Physical Swiss Gold (SGOL).

For all the talk about “risk on” versus “risk off,” the new 52-week highs paint a slightly different portrait. Specifically, the current environment may be more of a barbell approach, coupling ETFs with the least perceived risk and ETFs with the most perceived risk.

Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.