Sector Week-in-Review: Momentum in Silver, Homebuilders

by: Nick Perry

Nick Perry (Schaeffer's Investment Research) submits: Last week, we saw a strong upside reversal led by commodity-related funds, technology, and housing. This week we find a fairly balanced picture.

I need to start by noting the asterisks next to the iShares Silver Trust (NYSEARCA:SLV). I cut off the returns for the SLV because its eight-percent gain on the week threw the scale out of whack. Truncating the scale allowed a better view of the overall picture. When you get past the surge in silver, the rest of the action was fairly quiet as most moves were limited to less than two percent. Housing, retail, and basic materials followed behind silver while tech-related funds and pharmaceuticals lagged:

One interesting point was the divergence between PowerShares Software (NYSEARCA:PSJ) fund and the Software HOLDRS (NYSE:SWH), which shows how weightings and components can influence the performance. The PSJ is fairly well-balanced with no one stock accounting for more than six percent of the weighting. The SWH, however, is dominated by its top four stocks - Microsoft (NASDAQ:MSFT), Sap Aktiengesellschaft (NYSE:SAP), Adobe Systems (NASDAQ:ADBE), and Ca Inc (NASDAQ:CA) - which accounts for a little more than two-thirds. Rallies in ADBE and CA seemed to boost the performance of the SWH while the more-balanced PSJ suggests weakness in the sector.

For a longer-term perspective, the bullets below show how the ETFs listed above have faired during the past 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 Silver Trust (SLV) n/a
* SPDR Homebuilders (NYSEARCA:XHB) n/a
* PS Retail (NYSEARCA:PMR) -4.2%
* PS Building & Construction (NYSEARCA:PKB) -19.1%
* iShares DJ U.S. Basic Materials (NYSEARCA:IYM) -4.0%
* PS Water Resource (NASDAQ:PHO) -4.8%
* SPDR-Materials (NYSEARCA:XLB) -3.1%
* streetTRACKS Gold (NYSEARCA:GLD) +11.3%
* Regional Bank HOLDRS (NYSEARCA:RKH) +7.9%
* Software HOLDRS (SWH) -13.1%
* iShares DJ U.S. Real Estate (NYSEARCA:IYR) +7.8%
* Retail HOLDRS (NYSEARCA:RTH) -5.5%

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

* PS Utilities (NASDAQ:PUI) +8.8%
* Oil Service HOLDRS (NYSEARCA:OIH) -9.1%
* iShares Nasdaq Biotech (NASDAQ:IBB) -10.6%
* PS Food & Beverage (NYSEARCA:PBJ) +1.8%
* iShares DJ U.S. Technology (NYSEARCA:IYW) -11.5%
* PS Aerospace & Defense (NYSEARCA:PPA) +4.5%
* Pharmaceutical HOLDRS (NYSEARCA:PPH) +5.7%
* PS Hardware & Consumer Electronics (PHW) -11.4%
* iShares GS Networking (NYSEARCA:IGN) -23.9%
* PS Networking (NYSEARCA:PXQ) -17.7%
* PS Software (PSJ) -7.7%
* Wireless HOLDRS (NYSEARCA:WMH-OLD) -5.7%