Sector Week-in-review: Strength in Networking and Chips, While Financials Lag (ETFs: IGN, SMH, TLT)

Nick Perry (Schaeffer's Investment Research) submits: Last week we saw a balanced picture as mild strength in energy and financials was offset by mild weakness in technology related funds. This week we find a slight bias to the upside:

The best-performing side of the list is dominated by technology related groups, though oil services did manage to sneak in there. The underperforming side of the list was a bit more diverse, including financials, consumer-related groups, and internet stocks.

For a longer-term perspective, the bullets below show how the ETFs listed above have faired over the last six-months, prior to this week. In other words, it shows how they had been performing before this week's move.

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

* iShares GS Networking (IGN) +15.7%
* PS Networking (PXQ) +10.5%
* Semiconductor HOLDRS (SMH) +0.4%
* iShares GS Semiconductor (IGW) +12.1%
* PS Semiconductors (PSI) +20.7%
* Oil Service HOLDRS (OIH) +23.5%
* iShares DJ U.S. Technology (IYW) +6.4%
* iShares GS Technology (IGM) +6.5%
* PS Hardware & Consumer Electronics (PHW) n/a
* PS Software (PSJ) +10.8%
* SPDR-Technology (XLK) +4.6%
* PS Telecom & Wireless (PTE) n/a

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

* iShares DJ U.S. Financial (IYF) +11.6%
* iShares Lehman Aggregate Bond Fund (AGG) -1.8%
* iShares DJ U.S. Financial Services (IYG) +12.6%
* PS Building & Construction (PKB) n/a
* iShares Lehman 7-10 Year Bond (IEF) -2.9%
* Internet HOLDRS (HHH) +1.2%
* SPDR-Financial (XLF) +12.0%
* PS Insurance (PIC) n/a
* iShares DJ U.S. Consumer Goods (IYK) +1.5%
* PS Food & Beverage (PBJ) +3.3%
* Regional Bank HOLDRS (PKH) +10.4%
* iShares Lehman 20+ Year Bond (TLT) -3.7%

Last week I discussed the discrepancy between the SMH and PSI and here we see it magnified, as last week's decline brought the SMH back to nearly flat. The best-performing funds of the week, networking stocks (ETFs: IGN, PXQ), are gaining momentum as they chase the PSI, OIH and gold.

The real gain in the networking sector came Wednesday when it surged more than four percent. Here were Wednesday's returns for the component stocks of the IGN. The list is sorted by the stock's weighting in the IGN -- Corning is the most heavily weighted stock while Vitesse Semiconductor is the least: