After a strong earnings report from Intel (INTC) on Tuesday (the company beat the Street’s estimates by seven cents) all eyes will now be on IBM and Google (GOOG) to see if they carry the positive momentum into the fourth quarter. Confirmation of a recovery by these two bellwethers will add further confidence to those who believe in the market rally, while poor reports will probably lead to a tech selloff as traders lock in their gains from earlier this week. Below is a list of ETFs that have large positions in both IBM and Google that could see big movements following the announcements:

iShares S&P North American Technology Fund (IGM)

The closest thing that this market has seen to a correction was the 7% pullback in July, prior to Q2 earnings results. Similarly, the closest thing we’ve seen since July is the 5% pullback from an intra-day S&P high of 1080 on 9/23/09 to 1020 on 10/2/09; once again, trepidation has occurred before earnings reports.

Of course, the better-than-anticipated July results received an artificial boost… both from drastic cost-cutting by businesses and extreme analyst pessimism. More than 3 out of 4 companies exceeded profitability expectations, but only half were able to beat revenue expectations. And that was after analysts had already slashed revenue forecasts!

The Durable Goods report for August came out Friday and landed with a thud. The headline number for new orders fell a surprising 2.4% month-over-month after a better than expected July. How did things go in the sector?

Shipments

With Cisco's (CSC) revenue falling to $8.5 billion in its quarter ending July 25, 2009, from $10.4 billion in the quarter ending July of 2008, CEO John Chambers suggested that the company may have reached a tipping point. The idea that the world's largest manufacturer of routers and switches has hit rock bottom versus "may" have hit rock bottom spooked the market. Cisco shares were down 3.5% in after hours trading.

With Cisco being the lifeblood of the internet, I thought I'd take a peek at tech sector ETFs. Here are a number of performance "stats" for 4 of the more heavily traded vehicles:

These two tables present those ETFs with over $100M of market-cap and which also have 200-day moving averages that are sloping upward.

If your goal is to own ETFs that have a rising primary trend, then these ETFs are probably a reasonable place at this time to find opportunity.

The Good

Intel reported its strongest growth from the first quarter to the second since 1988 and offered optimistic comments for the second half of 2009. Based on improving conditions in the PC market, the technology bellwether expects sales in the third quarter to near $8.5 billion, well above the $7.8 billion tally forecasted by analysts. Commenting on the chip giant's results, one analyst quipped, 'Intel had a blow-out quarter on nearly every metric.'

Last week, Goldman Sachs analyst David Bailey raised his rating for the hardware sector to attractive from neutral. He remains cautious "although we are not calling for an immediate improvement in corporate IT spending" but he does expect "greater upside than downside to estimates into the seasonally stronger half of the year and in 2010." Next year he forecasts increased IT spending and corporate tech upgrades. With an eye towards the glass being half full rather than empty he states "This, combined with a 25% decline in the Goldman Sachs Technology Index since the peak in August 2008, creates a compelling buying opportunity".

Also last week, Goldman Sachs software analyst Sarah Friar ups her rating on the U.S. software industry to attractive from neutral. She feels that the worse of the IT spending cuts or restraints is over ; IT spending surveys indicate software is a priority; and, like the other analyst, that the second on half of this year and 2010 will be see increased IT spending. And specific to software she sees that software has lagged telecom and media performance year-to-date (YTD); software valuations are in-line with the average S&P valuations where they usually carry a premium; currency headwinds should abate or at least be less of a factor in year-over-year comparisons; and finally, M&A activity in software is heating up.

The Business Intelligence (BI) and On-Demand Software indexes continue to outpace the broader market indexes with YTD returns of 27.8% and 35.3% respectively as of June 19. The attached chart (clink on to see a larger version) compares these indexes with broader market indexes along with a select set of high tech ETFs that have also outpaced.

BI & On-Demand Software Indexes versus Broader Market Indexes & High Tech ETFs (Click to enlarge)

One problem with pumping oceans of money into world economies is that noone can say where they will eventually erupt. Is the magma we had to print turning into lava and nasty volcanoes?

I am still of the opinion that ominous creatures still lurk beneath the bubbly surface of many markets – what we see crawling are speckled vipers, not green shoots. In a way, it got worse these past weeks. I thought there was slightly more than even a chance of deflation, with inflation a distant threat. Now I think I smell the sulfur of the first rude eruption of inflation.

Assuming for this discussion that the 200-day moving average of a security could be called its primary trend, let’s see how the prices of a round-the-world selection of 60 diverse fund types (and 6 transport indexes) stack up to their primary trend, and whether their primary trend is up or down.

The first observation is that nearly all are in a primary down trend, based on the 200-day (40-week or roughly 10 month) average. In this batch of fund categories, only aggregate US bonds, intermediate US Treasuries, the Dollar index and the Japanese Yen are in primary up trends, but the price of the Treasuries fund and the Dollar index fund have fallen below their primary trend line. That leaves only two where the primary trend is up and the price is above the primary trend line — US aggregate bonds and the Japanese Yen.

By Matthew Hougan

After markets closed on Wednesday, Apple (AAPL) trounced expectations by reporting a 15% jump in its second-quarter earnings from a year earlier. That had to come as particularly good news for investors in the PowerShares QQQ (QQQQ).

Since its selection as Fidelity Independent Adviser’s Best Fund for Second Quarter 2009, Paul Frank’s ETF Market Opportunity Fund (ETFOX) has continued to beat the S&P 500. While Frank’s ETF based mutual fund has grown dramatically, his methodology has remained consistent, and he continues to attribute his success to both the transparency of ETFs and the fundamental oversight that a mutual fund provides.

In a follow up interview, provided below, Frank provided timely insight into recent changes in his fund holdings and explained how recent market events have impacted ETFOX.

With demand for PCs declining in the face of the recession, computer manufacturer Dell (DELL) on Thursday reported a 48% drop in profits and 16% drop in sales in its Q409 results. It missed revenue estimates but beat profit estimates, helped by a 16% reduction in operational expenses and strong cash flow. Let’s take a closer look.

Q4 revenue was down 16% to $13.4 billion, missing analyst estimates of $14.1 billion. Net income was down 48% to $351 million or $0.18 per share. Excluding charges, EPS was $0.29 per share, beating analyst estimates of $0.28 per share.

Dell, Inc. (DELL) closed Monday’s trading near a 12 year low at about $8 per share, adjusted for splits. Shares are roughly a third of where they were last summer, and since then the company has been on a downward spiral. The company reports fourth quarter and full year fiscal 2008 results on Thursday afternoon, and already many sources including the Wall Street Journal and Barron’s have begun to dampen expectations.

Dell is dealing with quite a few difficulties right now, chief among them is the fact that PC sales have dropped off quite a bit recently. Dell gets more than 60% of its revenue from the PC segment of their business. In addition, with one of Dell’s main competitors Hewlett-Packard (HPQ) reporting disappointing earnings last week, Dell could be dealing with many of the same troubles. (Click to enlarge)

By Murray Coleman

As stock markets took a beating in 2008, so did assets in most niche-focused sector exchange-traded funds.

These tables show the 1-week, 4-week, 13-week, 26-week and 52-week returns for a wide spectrum of asset types.

They, and other tables, are updated each Saturday morning on our site. These tables are for the week ended November 21, 2008.

As I wrote previously, both presidential candidates are bullish on the healthcare information technology industry – planning to increase spending and investment as a way to improve the quality of healthcare and reduce costs through automation and the widespread implementation of other technologies such as electronic prescribing and computerized medical records. The accompanying table (click to enlarge) highlights the performance over the past year of the ETFI Health IT Index of 38 companies along with the top five rated companies in the index.