Nick Perry (Schaeffer's Investment Research) submits: Last week we saw a snapback rally as 85 percent of my list grained ground with the Oil Service HOLDRS (OIH) and PowerShares Semiconductors (PSI) leading. This week we find that the snapback slipped up:
click to enlarge
Reversing much of the snapback, we find that 83 percent of my list lost ground this week. Housing stocks were hardest hit while silver topped the list. Aside from the percent gaining versus losing, you can also see that the magnitude of the losses outstripped the gains. In other words, we saw selling pressure hit much of the landscape.
Much of the headlines this week were focused on troubles in the subprime loan sector. New Century Financial (OTCQB:NEWC) added to jitters with the announcement of a grand-jury subpoena and a Securities and Exchange Commission probe. Accredited Home (LEND) then announced it was seeking capital after margin calls. The gloom from this group may help to explain why we find housing and financial ETFs among the weakest. The SPDR Homebuilders (XHB), SPDR-Financial (XLF), iShares DJ U.S. Financial Services (IYG), and iShares DJ U.S. Financial (IYF) funds all lost at least two percent.
In last week's column, I noted some positive developments on the PowerShares Semiconductors (PSI). The fund did pullback this week, making the bottom half of this week's graph, but did not give up all of its gains and still remains above the support we discussed.
The charts below highlight the recent price action for the top- and bottom-performing ETFs. One of the things that caught my eye is the steady progression in the Utilities HOLDRS (UTH) and iShares DJ U.S. Utilities (IDU). The gains this week weren't extraordinarily strong but both ETF have been gaining ground during the last year. 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 nine-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: