Nick Perry (Schaeffer's Investment Research) submits: Last week we saw that subprime loan jitters seemed to cast a haze over the action and put pressure on the housing and financial groups. This week's action would seem to suggest those jitters were short-lived:
My select list of domestic-based funds showed gains for all but a handful (a very small handful) of ETFs. More than 90 percent of my list headed higher, with more than half showing a gain of at least three percent.
The big news was, of course, the two-day FOMC meeting, which ended on Wednesday. While the announcement that rates were left unchanged at 5.25 percent was widely expected, the market still popped after the release. Some of the buyers seemed to be spurred on by the hope of eventual rate cuts, while others appeared to be relieved the Fed did not highlight subprime concerns. In terms of the broad-market action, I think it is worth noting the gains occurred in the first part of the week. The S&P 500 (SPX - 1,435.40) rallied on Monday, Tuesday, and Wednesday. The action of the last two days has been a consolidation.
Looking over my graph shows that energy-related ETFs led the charge this week with the PowerShares Energy Exploration & Production (NYSEARCA:PXE) fund in the top slot. The seven-percent gain this week was enough to push the PXE to a new annual high. That would also mark an all-time high for the fund, but it has only been trading since late-2005. The second best performing ETF this week, the SPDR-Energy (NYSEARCA:XLE) , is now within striking distance of its all-time high near 62.
Checking out the lagging groups for this week shows that the bond-related ETFs, which tend to be somewhat motionless, were flat to lower. Gold and silver did show gains on the week but clearly lagged the equity-based funds. Technology, biotech, and healthcare also underperformed.
The charts below highlight the top-three and bottom-three performing funds. I don't see too much worth discussing on the bond charts but the energy charts do show one point of interest. All three of the funds, the iShares DJ U.S. Energy (NYSEARCA:IYE) , SPDR-Energy (XLE) , and PowerShares Energy Exploration & Production (PXE) are all pushing into overbought conditions so those groups may see their momentum slow. (Note - details about the indicators used in these charts can be found at the bottom of this column.)
Each chart features the 50-day moving average and a 9-day relative strength index (RSI). I use the moving average (the green line) as a simple way to gauge trends and the RSI (red line below the price) suggests whether the ETF is overbought or oversold. (More information about using the RSI can be found here.)
Index performance this week:
Chart: Google Finance