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Know Your ETF's Holdings, Let The Buyer Beware

|Includes: EPI, T, Telecom HOLDRs (TTH), UNG, VZ

May 22, 2009

Let's take a look at some of this week's top- and bottom-performing ETFs and ETNs.  Keep in mind that we cull the list to have a variety of sectors and we toss out Ultra, UltraShorts, 2X, 3X, & Inverse ETFs.

Some of these names are lightly traded and may be fairly illiquid.  Make sure that you research the holdings and design of these ETFs before considering any trade.





Data courtesy of msn money:

On the positive side, EPI is an India-related ETF ... the India stock market saw massive gains on Monday after election results there were viewed favorable by the investment community.  Also some Natural Resource names showing up this week among the gainers.

On the down side, Natural Gas (UNG) reversed sharply lower over the past week and a half; and this is in divergence from Crude Oil which is generally rallying.

One of the poorer performers on the week is TTH, the Telecom HOLDRS.  This security is an example of why investors and traders should research and investigate the ETF that they may be considering trading.  According to Yahoo Finance, TTH is over 85% concentrated in just 2 stocks!  56% in AT&T (symbol T) and 29% in Verizon (VZ).  This is certainly NOT a diversified Telecommunications holding ... basically by investing or trading this ETF you are speculating on 2 stocks, T and VZ.

On a technical basis, there isn't much positive to see on either long-term or shorter-term TTH charts.  The Weekly Chart below shows the consisent downtrend in the security, with rally attempts foiled by the middle 50 area on Weekly Percent R.

TTH Weekly Chart











On the Daily Chart below, you can see that are largely rangebound in the 22 to 25 area, although 20 is certainly a downside target we could reach.  Percent R on the Daily basis is breaking down, showing the weakness in the shares.

TTH Daily Chart










Moby Waller
Disclosure -- none

In BigTrends ETF Options Trader advisory service, Andrew Hart recommends specific real-time ETF option trades on the best-moving, most-liquid ETFs.