Exchange Traded Fund (ETF) Focus - Leading and Lagging Sectors

This weekly column of SchaeffersResearch.com highlights some of the tools available in our new ETF center. Regular readers have seen me use Exchange-Traded Funds (ETF) to perform sector analysis in the past. Many of you have expressed a desire to be able to retrieve this type data on your own and our new ETF center gives you the ability to do just that, as well as much more.

I like to look at sectors relative to each in order to see what trends may be developing. I also like to look at multiple time frames to help reveal the underlying flow of money. An added bonus of the ETF Center is that you can directly analyze each ETF by clicking on its ticker symbol.

The graphs below were designed to supplement the data you can already pull in the ETF center and are based on a select list of ETFs and indices that I follow. As usual, here are the top and bottom performing groups from last Friday's close through this afternoon.

Last week we saw that internet stocks, energy, and commodity related groups were the best-performing groups, while there was an overall skew to the downside with real estate, small caps, and mid-caps as the largest decliners.

This week we see a more balanced picture with relatively small gains and losses. I stress relatively because this comes during a week when we saw oil surge to new highs amid poor earnings reports/reactions from Cisco Systems (CSCO: sentiment, chart, options) and Dell (DELL: sentiment, chart, options) and the Federal Open Market Committee chiming in to bump up interest rates.

At the top of the list we see the continual usual suspects from the energy/natural resource area. As you can see in the bullets below, these groups have been strong this year and continue to creep higher. Gold and bonds also make this week's list after these ETFs start to show some signs of life. On the downside, we see a mix of technology, biotech, and real estate.

Year-to-Date Returns for This Week's Top Performing Sector Exchange Traded Funds:

• iShares Natural Resource (IGE) +30.4%
• Energy Sector SPDR (XLE) +37.6%
• iShares Energy (IYE) +33.4%
• streetTRACKS Gold (GLD) +1.6%
• iShares COMEX Gold Trust (IAU) n/a
• iShares Treas Bond (TLT) +5.1%
• Oil Service HOLDRS (OIH) +38.1%
• Wireless HOLDRS (WMH) +1.8%
• iShares Basic Materials (IYM) -0.9%
• iShares Industrial (IYJ) -1.7%

Year-to-Date Returns for This Week's Bottom Performing Sector Exchange Traded Funds:

• Wilshire REIT Fund (RWR) +5.9%
• iShares Software Index (IGV) -7.3%
• iShares Real Estate (IYR) +3.3%
• iShares C&S Realty Majors (ICF) +5.9%
• iShares Nasdaq Biotech (IBB) -1.6%
• Semiconductor HOLDRS (SMH) +8.7%
• iShares Semiconductor (IGW) +6.6%
• Technology Sector SPDR (XLK) -1.6%
• iShares Technology Indx (IGM) -3.1%
• iShares Technology (IYW) -1.3%

Now I want to turn your attention away from the list and touch on the Nasdaq-100 Trust (QQQQ: sentiment, chart, options) . At least for me, when someone says QQQQ, I think, big-cap tech. In other words I tend to think about Cisco Systems (CSCO: sentiment, chart, options) , Dell (DELL: sentiment, chart, options) , Intel (INTC: sentiment, chart, options) , Yahoo (YHOO: sentiment, chart, options) , etc., which for the most part have not been stellar performers recently. Yet, the QQQQ currently sits within a few percentage points of its annual high. To get an idea of what stocks have been driving the recent action I, pulled the returns from the bottom in late April (through last night) for the components of the Nasdaq 100. Here are the top performing stocks over that time.

The fields are fairly self-explanatory, except perhaps for the last one - "rank." Before I sorted the stocks based on their performance, I sorted them based on their weighting in the Nasdaq 100 and numbered them. For example, eBay (EBAY: sentiment, chart, options) is the seventh highest heavily weighted component of the Nasdaq 100, according to data from their website.

What struck me about this list is that very few of the "bellwether" names are driving the action. Instead, it is dominated by the smaller and more volatile stocks. Given the recent market environment, this makes some intuitive sense but it also raises a point to ponder - how low can the QQQQ hold up without the help of Cisco and Dell. Or put another way, with the recent poor reactions from Cisco and Dell putting a drag on the group, it is going to become increasingly more important for the "second-tier" stock to hold up.

"bought the germany, united kingdom japan and sk monday etf's....all up except today. seems like they are worthy of making a line on your plus and minus weekly. nothing really happening out there, except they do comparatively better as the dollar weakens"
Respond