Momentum in Precious Metals, While Homebuilders and Retail Lag

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Includes: GDX, GLD, PRM, RTH, SLV, XHB, XLY
by: Nick Perry

Last week I stepped back to talk about the longer-term perspectives and noted that the year-to-date action was still fairly positive. This week I return to the short-term view of this week's leaders and laggards (click to enlarge):

This week brings us a stealth downside bias. I say "stealth" because the graph above actually looks fairly balanced. However, while the "large" moves were offsetting, the middle ground was firmly skewed to the downside. As it stands, 73% of the funds on my list are showing a loss on the week, albeit many are small losses.

Gold stocks were the undisputed champs of the week, with silver and oil following behind. Outside that commodity-related combo of ETFs, we have mild gains in biotech, Internet and various energy-related funds. Homebuilders, retail, and consumer discretionary were the weakest areas.

With this week's gains, the streetTRACKS Gold Trust (NYSEARCA:GLD) hit a new annual high. (For those interested, I covered this in my blog yesterday.) But, as noted above, the standout performer this week was the Gold Miners ETF (NYSEARCA:GDX), which surged roughly 10%. What struck me about this fund is the uptick in what I would term relative volatility. To illustrate what I mean, consider this: The GDX currently sits near 41 and shows an annual low near 32 and an annual high near 43. In July, the GDX peaked near 43 and finally hit a bottom last month near 32.

In other words, the ETF has more or less tagged its annual high and annual low since mid-July. And if that wasn't enough, it has now almost made a complete round trip from the lows back to the highs. To add another twist to that ride, note that the GDX is more or less unchanged from where it stood at the beginning of July. That is a lot of back and forth for no net movement.

Index performance 2007 year to date (click to enlarge):

Chart: Google Finance