In my column last week we saw that oil services had continued with mild gains, while a mix of technology and real estate rounded out the advancers, writes Nick Perry, who covers ETFs for Schaeffer's Investment Research. This week we find a tight race for the lead among internet stocks, energy and commodity related groups.
However, as you can see in the overall pattern of the graph above, there was a skew to the downside. While gains were capped near two percent and dropped off quickly, losses were larger and more common. Real estate was the largest decliner while small caps and mid-caps followed closely behind. To incorporate a longer-term perspective, the bullets below show the year-to-date returns for the ETFs listed above.
Year-to-Date Returns for This Week's Top Performing Sector Exchange Traded Funds:
• Internet HOLDRS (HHH) -13.2%
• iShares Natural Resource (IGE) +25.6%
• streetTRACKS Gold (GLD) -0.4%
• Oil Service HOLDRS (OIH) +35.4%
• iShares COMEX Gold Trust (IAU) n/a
• Energy Sector SPDR (XLE) +32.7%
• iShares Energy (IYE) +28.8%
• Wireless HOLDRS (WMH) +1.5%
• Technology Sector SPDR (XLK) +0.0%
• iShares Basic Materials (IYM) -1.6%
Year-to-Date Returns for This Week's Bottom Performing Sector Exchange Traded Funds:
• iShares Cons Goods (IYK) +0.2%
• iShares Industrial (IYJ) -2.5%
• iShares Transport Average (IYT) -2.2%
• MidCap SPDRs (MDY) +6.8%
• iShares SmallCap 600 (IJR) +5.2%
• Retail HOLDRS (RTH) +0.9%
• iShares Russell 2000 (IWM) +1.5%
• iShares Real Estate (IYR) +5.0%
• iShares C&S Realty Majors (ICF) +7.6%
• Wilshire REIT Fund (RWR) +7.4%
Internet stocks continue to build on last week's moment as the HHH tries to chip away at its year-to-date losses. Meanwhile, energy and commodity related stocks continue to add incremental gains to their strong year-to-date returns.
Last week I discussed real estate and said that momentum still seemed to be to the upside. This week's returns showed a sharp reversal which has eroded some of the year-to-date gains. However, this is still a relatively small blip in the overall trend. To illustrate my point, I have the weekly charts for the three bottom performing ETFs listed above - iShares Real Estate (IYR), iShares C&S Realty Majors (ICF), and Wilshire REIT Fund (RWR).
As you can see, all three charts have virtually moved in lockstep. I have added support zones to these charts to highlight what I see as the key levels to watch. While this week's drop could be the beginning of a topping pattern, I would wait for confirmation that support is being violated before betting on a downtrend.
Nick Perry (firstname.lastname@example.org)
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