Don Dion's  Instablog

Momentum Gainers

Coal

Market Vectors Coal (KOL)

Following the big advances in the week prior to last, a correction in coal stocks would not have been surprising. Instead, they had another solid week and the sector ETF, KOL, added 20.20 percent. That brings the two-week rally to 35.21 percent, and shares are up 50.92 percent in the past month.

Energy was a strong performer last week, with PowerShares DB Oil (DBO) up 9.55 percent and U.S. Natural Gas (UNG) up 22.95 percent.

Private Equity

PowerShares Listed Private Equity (PSP)

PowerShares International Listed Private Equity (PFP)

Financials are up big during the market rally, but one sector late to the party is private equity. PFP popped 11.76 percent last week and PSP added 11.64 percent, but that lagged the broader financial sector ETFs by roughly 10 percent. First quarter earnings reports helped drive shares in May, after companies reported strong financial results.

In the past month, PFP and PSP have gains of 29.10 and 36.56 percent, compared to returns of 52.98 percent for PowerShares FTSE RAFI Financials (PRFF) and 41.52 percent for SPDR Financials (XLF). The two private equity funds moved ahead of the financial sub-sector ETFs though, with two exceptions.

Turkey

iShares Turkey (TUR)

It has not been too difficult to pick the winners in the rally. Find the stocks that dropped the most, and watch them snap back. iShares Turkey (TUR) plunged 70 percent from high to low in the past year and economic worries dogged the country, which emerged from a currency crisis several years ago. Shares had tread water in early 2009 and did not initially rally with the rest of the global markets in March. From a close of $20.98 on March 16, however, TUR climbed 40 percent to $29.30 on April 16. Shares slowed their ascent in the next three weeks and gained 12 percent through Friday’s close.

The IMF currently predicts Turkish GDP will decline 5.1 percent this year.

Momentum Losers

Livestock

iPath Livestock (COW)

Don’t call it swine flu! If you need a clear example of why the current flu panic du jour isn’t caused by pigs, look no further than pork prices. During the outbreak of actual swine flu in China last year, the government ordered the slaughter of pigs and pork prices soared. Now, several countries have banned the import of pork and consumption is down. With 37 percent of the index in lean hogs, COW has dropped 1.7 percent since news broke on April 24.

In the past week, COW has gained 2.57 percent. It has fallen 3.06 percent in the past month and 3.09 percent in the past three months.

Japanese Yen

CurrencyShares Japanese Yen (FXY)

FXY rallied 0.77 percent last week and has returned 1.14 percent in the past month. Its three-month loss of 6.60 percent has cost it momentum, however, and vestigial correlation with equity markets work against the yen. FXY has moved in the opposite direction of equity markets for much of the past two years, but the yen peaked during the fall 2008 panic. At that time, the yen gained versus the dollar, as the dollar gained versus most major currencies. Now, the dollar is weaker and equity markets are rising, and the yen has weakened versus the greenback. 

This morning, however, with the S&P 500 Index down more than 2 percent, FXY was up more than 1 percent.

Biotech

SPDR S&P Biotech (XBI)

Though it has technology in its name and technology has outperformed recently, the riskier side of healthcare has not joined in the market’s rally. Financials, real estate, technology and some energy ETFs left biotech behind by a wide margin. In biotech’s favor, its long-term returns are not bad: XBI lost 12.60 percent over 6 months, compared to a 11.66 percent loss for iShares Dow Jones U.S. Financials (IYF).

Since the character of this rally is worst to first, the relative outperformance of healthcare ETFs during the market’s decline meant they were not as attractive at the bottom in early March. Furthermore, the cloud of government intervention is working against healthcare, while the taxpayer bailouts benefit financials.

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