Market Vectors Steel: The Top Performing ETF YTD

Market Vectors Steel (AMEX: SLX) made my Coolcat ETF Rankings for the first time in early July and became the first new listing to debut at No. 1. It also held the top spot in an interim listing compiled July 21. It has only recently cracked the rankings because its volume finally meets my minimum criteria of 100,000 shares traded daily.

Market Vectors Steel is composed of 31 steel producers in the AMEX Steel Index, which includes companies primarily involved in the production of steel products or the mining and processing of iron ore.

The top three holdings are Cia Valle do Rio Doce (NYSE: RIO), a Brazilian firm; Mittal Steel (NYSE: MT), which is headquartered in The Netherlands; and Rio Tinto PLC, which is based in London. Together the trio account for 44.9% of the net assets of the index, while the top eight holdings account for 70.6% of the fund.

The top five holdings are foreign companies, with eight overall making their home outside of the U.S. and representing 63.3% of the index. Other foreign countries represented include South Korea, Luxembourg, Russia and Mexico.

The three largest domestic companies are Allegheny Technologies (NYSE: ATI), U.S. Steel (NYSE: X) and Nucor (NYSE: NUE). All three represent 4-5% of the index. No other U.S.-based company accounts for more than 2%.

Twelve of the bottom 13 holdings are American companies, with these small fry making up just 4.9% of the index.

SLX has never traded below its Oct. 17, 2006 opening day low of 41.80 and has risen 66% since then. It had a string of seven straight winning months snapped with a 1% loss in June. It has gained 5.5% in July through Wednesday's close and is the top-performing ETF year-to-date with a 49.6% jump.

Improving industry profits and soaring demand in emerging markets like China are sparking the move. Consolidation and speculation about future merger activity are also causing investor interest.

It's weakened a bit lately along with the general market, falling 4.7% off its July 13 high of 72.80 and making a three-week low at 68.35 today before bouncing into the close.

See here for more information.

Possible Strategy: buy at 70 or less with a sell stop at 62.99 and a short-term target of 84.

SLX 1-yr chart

Disclosure: none