Which ETFs look interesting today?

[XL-entLady]

As I learn what is out there in the ETF universe, I discovered this 2/4/2009 article on Seeking Alpha. It was informative for me and I hope you enjoy it too.


ETF Ideas for a Time of Uncertainty

Investors and traders alike can profit by paying attention to equity sectors. We monitor sectors via our ETF universe. Every day we generate ratings for each ETF using a combination of Trend, Cycle, and a bit of Anticipation. Our model has a time horizon of about thirty days, drawing upon a sophisticated interpretation of market indicators. (For new readers, there is a more complete description of our methods and ratings at the end of the article.)

A Negative Picture
The main theme of our sector survey is negative. Only five ETFs earn a buy rating, which requires that the ETF meet two tests. A sector must have a positive strength rating on either a trend or cyclical basis. Second, it must not be in the "penalty box," where we put sectors that violate various technical criteria. You can think of it as a stop loss, but more sophisticated.

Three of the five sectors are inverse ETFs, so this is actually a negative signal. One of the two genuine long positions (http://oldprof.typepad.com/a_dash_of_insight/2008/11/etf-update-a-new-look-at-gold.html)is the Market Vectors Gold Miners (GDX (http://seekingalpha.com/symbol/gdx)), which is a defensive play. The only true long is the iShares Dow Jones U.S. Medical Devices Index Fund (IHI (http://seekingalpha.com/symbol/ihi)), which has a modest positive rating, perhaps spurred by Obama speculation.
...." [continued, and includes informative list]

http://seekingalpha.com/article/118343-etf-ideas-for-a-time-of-uncertainty

Lady

[XL-entLady]

GLD, TBT and UDN:


Three ETF Opportunities for a Steepening Yield Curve

"Anyone still arguing in favor of deflationary forces resulting from the financial crisis should think again. Here’s why…
A report submitted to Treasury Secretary Geithner (by the Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association) acknowledges that the steepening yield curve may be a direct by-product of the extraordinary funding requirements in 2009-2010.
Funding needs are based upon expectations of weaker economic growth and Congress and the Administration’s stimulative policy actions. Increased TARP expenditures, potential FDIC guarantees, and additional fiscal "stimulants" could push government funding needs to $2 trillion.
Under such a scenario, Americans are looking at Treasury funding requirements being the largest percentage of GDP since the post-war era.
Intermediate-term technical analysis of long-term treasury yields (see charts below) supports the probability of rates rising above 4% before encountering any significant resistance. Meanwhile, the U.S. Dollar’s days of basking in the "flight-to-safety" trade appear to be over as (see charts below) the Dollar is no match for long-term rising rates on a relative basis.

The bottom line: If this situation persists, expect the Gold Trust ETF (GLD (http://seekingalpha.com/symbol/gld)) and the UltraShort 20+ Year Treasury Bond ETF (TBT (http://seekingalpha.com/symbol/tbt)) to continue their superior market performance. Another security that stands to benefit under these same market conditions is the U.S. Dollar Bearish Fund ETF (UDN (http://seekingalpha.com/symbol/udn)). If the dollar breaks down, the UDN should appreciate due to its negative correlation to the U.S. Dollar index."


http://seekingalpha.com/article/119192-three-etf-opportunities-for-a-steepening-yield-curve?source=article_lb_articles

Lady

[XL-entLady]

I pay a lot of attention to health care costs. :( So I started wondering about health care ETFs. DBP is one I'm thinking of buying on the next pull-back. Or XLV. What do you think?

(I'd paste the charts, but as usual I can't get my screen snip to copy from the clipboard to the post. Hate those PEBCAC* errors! :embarrest:)

Lady

*PEBCAC: Problem exists between computer and chair. :rolleyes:

[XL-entLady]

http://www.dailymarkets.com/stocks/2009/02/15/the-five-most-promising-emerging-market-etfs-for-2009/
Which ETFs the Pros are Buying

For investors, the message is clear. Our emerging markets investments must be concentrated in countries that will not be badly affected by the decline in foreign capital inflows, preferably where domestic savers have piggybanks that are large enough to fund expansion locally.

In particular, without delving into particular stocks, the following country-specific exchange traded funds (ETFs) are worth looking at:

The iShares MSCI Brazil Index (EWZ (http://www.dailymarkets.com/symbol/EWZ/): 38.99 +0.48 +1.25%) has net assets of $3.4 billion, a Price/Earnings (P/E) ratio of 7.0, and a dividend yield of 6%. Money Morning Contributing Editor Horacio Marquez recently recommended this Brazilian ETF in this weekly “Buy, Sell or Hold” series (http://www.moneymorning.com/2008/10/27/ishares-msci-brazil-index/).
The iShares MSCI Chile investable Index (ECH (http://www.dailymarkets.com/symbol/ECH/): 36.18 -0.18 -0.50%) has net assets of only $112 million and a P/E of 13. However, Chile is interesting because it built up a reserve fund of $21 billion (12% of GDP) during the years when copper prices were high - it is thus not dependent on foreign-fund inflows.
The iShares FTSE/Xinhua China 25 Index (FXI (http://www.dailymarkets.com/symbol/FXI/): 26.81 +0.35 +1.32%) invests in the 25 largest Chinese companies. Net assets are $5.9 billion, its P/E ratio 10, and its yield 2.7%.
The iShares MSCI Taiwan Index (EWT (http://www.dailymarkets.com/symbol/EWT/): 7.21 +0.10 +1.41%) has net assets of $1.3 billion, a P/E of 9 and a yield of 8%. Taiwan is highly liquid, with large reserves, a high savings rate and almost no foreign debt
The iShares MSCI Singapore Index (EWS (http://www.dailymarkets.com/symbol/EWS/): 6.29 -0.01 -0.16%) has net assets of $800 million, a P/E of 9 and a yield of 8%. Like Taiwan, Singapore is highly liquid, with large foreign exchange reserves and little debt. Taiwanese and Singapore companies may indeed benefit from the liquidity crunch by finding attractive investment opportunities in regional cash-short emerging markets with high growth potential, such as Vietnam.
Don't know if you're interested in emerging markets. I'm looking at China.
Lady

[XL-entLady]

Not sure why (because of spring planting?), but agricultural chemical companies are starting to move higher. My MOO and the COW ETF, and just about any stock that sells, for example, potash.

For what it's worth,
Lady

[XL-entLady]

Not sure why (because of spring planting?), but agricultural chemical companies are starting to move higher. My MOO and the COW ETF, and just about any stock that sells, for example, potash.

For what it's worth,
Lady
Except that COW is having a bad day today .... MOO is still up. and stocks like TRA and TNH.

Lady

[etftalk]

Don't know if you're interested in emerging markets. I'm looking at China.


Trader Fred has been asking me to talk more about the India, China and Russian economies as a place for possibly the next long term boom. I am a little reluctant, not because I don't think they will be good investments, but because I am very weak on fundamentals. If I see a good China ETF chart I will trade it, but I will have to force myself to make a long-term investment in anything. It's not my style.

I gave him a list a about a dozen ETF's that might work. He may take a couple of the less thinly traded ones and apply his system to it.

[etftalk]

Except that COW is having a bad day today .... MOO is still up. and stocks like TRA and TNH.

LadyI have a time taking MOO and COW seriously. :D

There are several folks, including Jim Rogers, who think that the agriculture sectors will be huge. He said the farmers will be rich and driving the Maseratis while Wall Street suffers.

[XL-entLady]

This article really caught my eye. Not sure which thread to put it in because it touches on several subjects, but it makes some interesting suggestions for ETFs and strategies. Enjoy!

http://www.dailymarkets.com/stocks/2009/02/18/long-term-positions-and-short-term-trading-plus-the-three-asian-cash-kings/

Long-Term Positions And Short-Term Trading, Plus The “Three Asian Cash Kings”

By Mario Cavolo (http://www.dailymarkets.com/author/mariocavolo/) on February 18, 2009
"Tom Lydon recently started another excellent article of his alluding to the death of the buy/hold strategy. And it leads to a question, especially as we’re all looking at what is probably going to be a plunge for the next several weeks. Is there any stock or ETF we should really be longterm long right now? Should we allocate 20-40-60% of our portfolio to longterm holds and swing trade with the balance?

If the answer is yes, then thoughtful analysis concludes taking longterm positions in the safest, beaten down dividend payers you can screen. For example, I’m holding Penn Virginia Resources Partner (PVR (http://www.dailymarkets.com/symbol/PVR/): 13.12 0.00 0.00%) (coal) Now that a plunge seems likely, I may have bought it $1-$2 too soon, but I bought it for the longterm and so I don’t really care about a smaller unrealized loss. Altria (MO (http://www.dailymarkets.com/symbol/MO/): 15.53 0.00 0.00%) is the next that comes to mind.

Confirm as best we can a stock is a safe dividend and buy it soon with minimum downside risk. Yes, WAIT at the moment to see if we fall off the cliff first. Do NOT forget that even some great value low P/E safe dividend-paying stocks will have their prices beaten down to hell as the bear continues these few months. Some won’t budge and you’ll feel wise.
Regarding longterm ETF holds, we should look at healthcare, oil/energy. Recently, there’s attention toward the “Three Asian Cash Kings” China, Taiwan, Singapore, plus Brazil’s iShares MSCI Brazil index ETF (EWZ (http://www.dailymarkets.com/symbol/EWZ/): 35.80 0.00 0.00%). These ETFs pay a healthy dividend.

I am compelled as a businessman living in China for almost 10 years to remind everyone of the amazing China FXI (FXI (http://www.dailymarkets.com/symbol/FXI/): 25.57 0.00 0.00%)/Taiwan EWT (EWT (http://www.dailymarkets.com/symbol/EWT/): 6.89 0.00 0.00%)/Singapore EWS (EWS (http://www.dailymarkets.com/symbol/EWS/): 6.05 0.00 0.00%) reality. Yes these three China/Asia markets are not decoupled from a further plunge which could easily happen, BUT these countries are CASH RICH to a degree that westerners truly do not comprehend. There is so much cash here, even in the hands of the lower middle class. They (approximately 100-300,000,000 Chinese, depending on who you ask) go about their business while all around them economics are melting down. Why would a person be that concerned if you also typically had well over $100,000 USD in the bank, owned two or more apartments mortgage free, and could comfortably live on a budget of less than $1000/month which includes eating out very often? Living 9 years ago in Chengdu, China, I had a close friend aged 25, who was the assistant principal of a local school on a salary of USD $250/month. Yet he had $10,000 in his account playing the stock market! Its a different world and mentality.

So position your longterm holds carefully and relax. Then, with precision and discipline, trade indexes, oil, gold/silver with the 2X/3X long and short ETFs such as FAS/FAZ, BGU/BGZ, EDC/EDZ, XLF/SKF, DGP/DZZ, DXO/DTO to swing trade or hedge your longterm holdings."

Lady

[XL-entLady]

And here's another article that will help me to populate my long-term watchlist. It has some interesting charts that will not copy over into the post, so if the following excerpt intrigues you please follow the link to see the entire article.

Lady

http://seekingalpha.com/article/121449-whats-the-best-u-s-total-market-etf-style-sector
What’s the Best U.S. Total Market ETF? Style? Sector?

by: Index Universe February 19, 2009

"If you're looking at January performance, the answer is clear: the ELEMENTS Benjamin Graham Total Market ETN (BVT (http://seekingalpha.com/symbol/bvt)).
And not just by a little. BVT posted a positive 6.44% return in January, outpacing the next closest competitor (the iShares Russell 3000 Growth ETF, IWZ (http://seekingalpha.com/symbol/iwz)) by more than 11%.
...

This raises an absolutely critical point: the choice of ETFs matter. And once you move beyond total market funds into more specific styles or sectors, the choice of ETFs matters even more.

The table below compares the January returns of the top and bottom performing ETFs for each of the 11 size/style boxes. The variance in one-month returns ranges from 3.95% (for Mid-Cap Growth ETFs) to 28.09% (for Small-Cap Value ETFs). In half of the categories, at least one ETF delivered a positive return, which is impressive when you consider that January was the worst month for U.S. equities in history....."

[XL-entLady]

The following article contained too many images in it's original form, so if it is of interest to you please follow the associated link to view the entire thing.


What the Stimulus Plan Means for ETFs, Sector by Sector

by: Tom Lydon February 19, 2009


"The stimulus plan is out, signed and ready to go (http://www.etftrends.com/2009/02/midday-market-update-4-ways-stimulus-helps-you.html), and the money is accounted for. Billions are spread out across several sectors, and the new funds could soon impact exchange traded funds that target those sectors.
Total spending is $317.2 billion. Across the sectors, which are some of the ETFs that could be reaping some rewards as the money kicks in? Whatever happens with these ETFs in the coming months, be sure to follow the trends (http://www.etftrends.com/2008/07/an-etf-trend-following-plan-for-all-seasons.html) and have an entry (and exit) strategy. We don’t get in until a fund is above its long-term trend line (the 200-day moving average).


The following sector rundown includes spending provisions of the bill, not tax provisions, according to CNN Politics (http://www.cnn.com/2009/POLITICS/02/18/stimulus.spending.chart/index.html).

Transportation, housing and urban development; $57.1 billion iShares Dow Jones U.S. Real Estate Index Fund (IYR (http://seekingalpha.com/symbol/iyr)): down 13.3% over three months; down 20.3% over one month.

http://static.seekingalpha.com/uploads/2009/2/19/saupload_c0453.png (http://static.seekingalpha.com/uploads/2009/2/19/saupload_c0453.png)

iShares Dow Jones Transportation (IYT (http://seekingalpha.com/symbol/iyt)): down 19.2% in the last three months, down 8% in the last week.


Federal and State Government; $45.472 billion iShares S&P National Municipal Bond Fund (MUB (http://seekingalpha.com/symbol/mub)): up 0.5% over three months; up 0.02% in one week.
http://etftrends.redinews.com/tools/C04?queryid=QJ33042&symbol=mub

Commerce, Justice and Science; $17.842 billion Biotechnology HOLDRs (BBH (http://seekingalpha.com/symbol/bbh)): up 4.1% over three months; up 0.1% over the last 1 week.
http://etftrends.redinews.com/tools/C04?queryid=QJ33042&symbol=bbh

Defense and Security; $16.4 billion PowerShares Aerospace and Defense (PPA (http://seekingalpha.com/symbol/ppa)): up 5.6% over three months; down 3.0% over one week.


Agriculture and Rural Development; $15,986 billion PowerShares DB Agriculture (DBA (http://seekingalpha.com/symbol/dba)): down 5.2% over three months; down 6.3% over one week.


Energy and Environment; $98,234 billion Market Vectors Global Alternative Energy (GEX (http://seekingalpha.com/symbol/gex)): down 0.3% over three months; down 8% over one week.
http://static.seekingalpha.com/uploads/2009/2/19/saupload_c0458.png (http://static.seekingalpha.com/uploads/2009/2/19/saupload_c0458.png)

Labor, Health and Education; $66.15 billion Health Care Select Sector SPDR (XLV (http://seekingalpha.com/symbol/xlv)): up 4.2% over three months; down 2% over one week."

http://seekingalpha.com/article/121546-what-the-stimulus-plan-means-for-etfs-sector-by-sector

Lady

[XL-entLady]

Here is a short excerpt from an article that had quite a few interesting little nuggets. If you have time to do any reading today I recommend that this one be high on your list.

Gold-Backed ETFs on a Roll

by: The Report March 04, 2009

"....You’ve identified a number of core themes for the overall portfolio. One is overweighting for the major caps, another is international, and a third is gold....."

http://seekingalpha.com/article/124044-gold-backed-etfs-on-a-roll

Lady

[XL-entLady]

I don't know if you've already seen this or not. I found it to be very informative, so I wanted to make sure you've all seen it too. "ETF Lab, March 2009" published 3/5/09.

http://www.traders-talk.com/mb2/index.php?act=attach&type=post&id=10109

Lady

[etftalk]

Very cool info. Thanks!

[XL-entLady]

This article is about gold, silver, oil, the dollar and copper, so rather than put it on the gold, silver or oil threads I stuck it here. I thought the information was very informative, and hope you enjoy it too.

March 09, 2009
Gold and Oil Poised to Rise amid General Market Crash
by Roy Martens

"It's March already and the financial markets are on fire, negatively that is!
The world indices are at lows not seen for over 15 years and the fear is that there's still much more to come. Maybe we'll see a bounce first but this bear market is far from over.
The worldwide economy keeps on deteriorating further and further and at a pace not seen in recent history. Where will this end we ask ourselves? Well, I don't think anybody really knows because the current situation is unprecedented.
Interest rates are being lowered all over the globe in order to keep the financial system going. The big question is will it work? The problems in the system are so enormous that all the measures taken up until now have failed, so why keep on throwing good money after bad?
The possibility of deflation is now looming. Consumers are slowing spending at a rising pace, so prices have to be lowered in order to persuade the consumer to buy products again... this combined with the very low interest rates and the creation/printing of new money will without any doubt lead to hyperinflation further down the road, a perfect environment for precious metals.
Any decline in these metals over the coming months or years should be taken as a last opportunity to preserve some of your wealth and livelihood. Don't be fooled by the powers that be. They want to preserve the current status quo as long as possible but just look at the writing on the wall. The times they are a-changin' and they are changing fast. Make sure that you will not be left behind once the precious metals train starts its decade long journey.

All charts are courtesy of Stockcharts.com (http://www.stockcharts.com/)
GOLD
http://safehaven.com/images/martens/12789_a.png
Gold is within a blue rising channel and is putting in a strong performance. It even briefly breached the upper channel line, a showing of strength.
The recent drop was expected and the 50 d. MA did the job, holding firm and allowing Gold to use it as a springboard for another rise. If Gold manages to break above the 14 d. MA the way is clear for a new high. Should however the 14 d. MA prove to be too strong to overcome, a test of the lower channel line (currently at $900) can be expected.
For now, the chart favours of a rise to the top end of the channel, currently at $1,025.

SILVER
http://safehaven.com/images/martens/12789_b.png
Like Gold, Silver is showing strength. It reached the resistance at $14 which was the signal for a correction, and the RSI showed the way by getting extremely overbought.
This correction tested the 50 d. MA and currently Silver is challenging the 14 d. MA again. A break above it will clear the way for another run at the $14 resistance and most likely even a run all the way to the $16 level.
The conditions in the chart are perfect for this bullish scenario to unfold. RSI is bottoming at the 50- level, Buying power is triggering a new buy signal, and the MACD is curling up again in positive trend territory. So far so good!

OIL
http://safehaven.com/images/martens/12789_c.png
Oil seems to have turned the corner. We see a nice saucer shape bottom, which in many cases is very reliable. It is also on the verge of breaking above the newly formed resistance line (magenta) which should clear the way for a new rise towards the mentioned resistance levels in the chart.
This upcoming month could trigger another important buy signal, a crossing of the 14 d. MA above the 50 d. MA, confirmation that the trend has changed from negative to positive.
The future for oil looks very good based on this daily chart and higher prices are expected.

USD
http://safehaven.com/images/martens/12789_d.png
Despite the poor economic conditions, the USD is showing strength against other currencies. It managed to get above the last high at 88, building on its current trend of higher lows and highs.
Normally a break of a prior high will lead to fresh buying. However, there's a bearish pattern showing up in the chart in the form of a rising wedge. Such a pattern is often followed by a decline back towards the base of the pattern, which in this chart is at 78 (a break below the lower pattern line is needed for this expectation).
The USD can avoid this bearish outcome by breaking higher past the upper pattern line thus making the pattern invalid. For now the outlook remains positive, at least as long as the USD manages to stay above the 14 d. MA.

COPPER
[Please note that I had to remove the 'copper' chart because of the image limit for posts. You can find this chart by following the link below. Lady]

The Copper chart is improving and just like Oil we see a saucer shape bottom occurring in the chart. Copper recently took out the newly formed resistance level formed over the last couple months, indicating that positive pressure is building.
Both of the MA's are starting to rise now in support of a further advance, and the other technical indicators are in a very good position to support such an advance.
All in all we should see higher prices this upcoming month."

http://safehaven.com/article-12788.htm

Lady

[XL-entLady]

"Financials, in today's world, are almost entirely speculative. In contrast, the fact that Utilities (NYSE: XLU (http://studio-5.financialcontent.com/greenfaucet?Page=QUOTE&Ticker=XLU)) have sold off to new 52-week lows below 22.7 seems strangely out of line with a strong infrastructure relationship. Then again, the broader markets are only batting 2/15 in the last 15 trading days... almost as bad as Alex Rodriguez in post-season baseball.
So why in the world should utility ETFs like SPDR Utilities (NYSE: XLU (http://studio-5.financialcontent.com/greenfaucet?Page=QUOTE&Ticker=XLU)) or iShares DJ Utilities (NYSE: IDU (http://studio-5.financialcontent.com/greenfaucet?Page=QUOTE&Ticker=IDU)) go anywhere? Because on March 5, an unknown institutional player placed the largest ever option trade in the history of trading XLU options. 142,000 call options were purchased at an April strike price of 25.
The implication? Someone is either covering short positions or expecting new legislation to send the utilities market dramatically higher in a short period of time."

http://www.greenfaucet.com/technical-analysis/why-utilities-etfs-and-or-financials-etfs-could-rocket-higher/25002

Lady

[XL-entLady]

I'm a firm believer that commodities will be the next big mover as inflation begins to heat up. With that in mind, I found this Seeking Alpha article to be very informative. Because of its length, I'll break it into two posts.

The Ultimate Commodities ETF Guide


"Commodities have received greater exposure in recent years thanks to a major bull rally in commodity prices coupled with new products designed to make these securities available to common stock investors. Many investors are familiar with precious metals and energy exchange-traded funds (ETFs), such as SPDR Gold Shares (GLD (http://seekingalpha.com/symbol/gld)), PowerShares DB Oil (DBO (http://seekingalpha.com/symbol/dbo)), U.S. Oil (USO (http://seekingalpha.com/symbol/uso)) and iShares Silver Trust (SLV (http://seekingalpha.com/symbol/slv)), but they now have the option of investing in a variety of individual commodities and have a choice between several indexes that offer unique commodity weightings.


When oil prices rallied to $150 per share and corn prices advanced on ethanol demand, investors looked to grab a slice via ETFs and exchange-traded notes (ETNs). When commodities slid at the start of a major global recession, prices fell as much as 75 and 80 percent. Recently, several commodities have climbed off their lows, and some investors are starting to look at the sector in anticipation of an economic recovery. Commodities tend to outperform during the early phases of an economic expansion, when the rising demand outstrips the supply, due to recessionary cutbacks, and during the later stages, when demand again outstrips available supply. The point of this article is not to assess whether the economy is on the verge of a recovery—that’s a topic unto itself—but to compare the relative strengths of different indexes and investment approaches.


Any decision to invest in commodities should begin with the index funds. For the vast majority of investors, indexing makes the most sense. As with equity indexes, the securities providers have designed a plethora of ways to gain commodity exposure.


Broad Indexes. These commodity indexes offer exposure to the three subsectors—agriculture, energy and metals. The broadest of the broad indexes may be the ELEMENTS Rogers International Commodity Index Total Return ETN (RJI (http://seekingalpha.com/symbol/rji)). According to the prospectus, the fund balances commodity consumption patterns across developed and developing countries. Its twenty agricultural components compose 34.9 percent of the index, ten metals compose 21.1 percent and six energy commodities make up 44 percent of the index. The nineteen-component iPath Dow Jones-AIG Commodity Index Total Return ETN (DJP (http://seekingalpha.com/symbol/djp)) invests 36 percent in agriculture, 30 percent in metals and 34 percent in energy.


iShares S&P GSCI Commodity-Indexed Trust ETF (GSG (http://seekingalpha.com/symbol/gsg)) invests in the S&P GSCI Total Return Index, as does iPath S&P GSCI Total Return Index ETN (GSP (http://seekingalpha.com/symbol/gsp)). (The difference between the two funds is that one is an ETF and the other is an ETN.) Twenty-four components comprise these funds, of which 24 percent is in agriculture, 11 percent is in metals and 65 percent is in energy.


Finally, PowerShares offers the PowerShares DB Commodity Index Fund (DBC (http://seekingalpha.com/symbol/dbc)), the least broad index. It holds six components, two each of the three subindexes: 22.5 percent agriculture, 22.5 percent metals and 55 percent energy. All these funds charge 0.75 percent in annual fees.
Beyond the level of exposure to subindexes in each fund is the exposure to each individual commodity. Gold, for instance, ranges from 14.22 percent of RJI and 14 percent of DBC (though the index base weight is 10 percent) to 3.4 percent of GSG and GSP and 8.2 percent of DJP.


DBC has the largest trading volume among its broad-based commodity index peers, with well over a million shares trading on an average day. RJI, DJP and GSG have also proved to be liquid products, with average daily trading volumes of approximately 300K, 470K and 430K, respectively. GSP, while sharing the same index as its ETF equivalent, GSG, has failed to attract the same attention, with just 50K trading on the average day. DJP, GSG and GSP are created in 50K units, while RJI and DBC are created in 400K and 200K units, respectively.


Performance-wise, the difference between the weightings has led to divergent returns. Since October 2007, when the latest of these funds was introduced, DBC has been the best performer, down 31 percent, compared with a 49 percent drop for GSP. RJI and DJP finished in the middle but closer to DBC. Year to date, RJI is the best performer, up nearly 5 percent, while DJP and DBC are flat. GSG and GSP are down about 5 percent (through May 4). Assuming there is not a single breakout commodity that skews the indexes, these indexes will trade in the same general direction, and in the long run, the difference between them will be smaller than the difference with equity and bond funds.


Last but not least, ELEMENTS also offers a long/short commodity fund: ELEMENTS S&P Commodity Trends Indicator - Total Return (LSC (http://seekingalpha.com/symbol/lsc)). The fund is currently neutral on energy (it cannot be short energy) and long on grains, industrial metals, precious metals, cotton and sugar. It is short livestock, cocoa and coffee. The index uses a moving exponential average to determine whether to go long or short in each sector, and when it is neutral on energy, it distributes the weight “proportionately to the other five sectors.” The fund isn’t a hedged fund, however, that goes long and short at the same time—it could be all long or all short/neutral based on market conditions. Investors interested in more information should read the prospectus, which offers a detailed explanation of the index methodology.
The strategy paid off last year, and LSC rallied from September until December. Since its inception last July, LSC beat the other long indexes by 20 percent, with a return of just under 0 percent. It has underperformed this year because the fund is short in some sectors, causing it to miss the full effect of the rallies in March and late April. Compared to the other broad indexes, it is the worst performer in 2009, down more than 10 percent.


Sector Indexes. ELEMENTS and iShares shine in the sector index space. ELEMENTS offers investors the exact components of the broad index in the same proportional ETN allocations: RICI Total Return Agriculture (RJA (http://seekingalpha.com/symbol/rja)), RICI Total Return Metals (RJZ (http://seekingalpha.com/symbol/rjz)) and RICI Total Return Energy (RJN (http://seekingalpha.com/symbol/rjn)).
iPath offers a suite of seven subindex ETNs: one energy (JJE (http://seekingalpha.com/symbol/jje)), one broad agriculture (JJA (http://seekingalpha.com/symbol/jja)) with three subsectors (JJG (http://seekingalpha.com/symbol/jjg), JJS (http://seekingalpha.com/symbol/jjs) and COW (http://seekingalpha.com/symbol/cow)), plus two metals (JJM (http://seekingalpha.com/symbol/jjm) and JJP (http://seekingalpha.com/symbol/jjp)).


PowerShares offers agriculture, base metals, precious metals and energy ETFs. (DBA (http://seekingalpha.com/symbol/dba), DBB (http://seekingalpha.com/symbol/dbb), DBP (http://seekingalpha.com/symbol/dbp) and DBE (http://seekingalpha.com/symbol/dbe)).


Individual Commodities. Gold, silver, oil and natural gas were among the most popular single-commodity funds and were introduced around the same time as the broad indexes. More recently, iPath has introduced a suite of individual commodity ETNs filling in the gaps: four soft commodities, five industrial metals and platinum (PGM (http://seekingalpha.com/symbol/pgm)).


Two commodities gaining popular attention in recent weeks are copper and natural gas. iPath DJ-AIG Copper Total Return (JJC (http://seekingalpha.com/symbol/jjc)) rallied 50 percent this year, thanks to heavy buying from Chinese importers, though the rally may not last because Chinese thirst for copper is not insatiable. U.S. Natural Gas (UNG (http://seekingalpha.com/symbol/ung)) is down 37 percent this year on weak demand, but it has been a topic of conversation among investors looking to pick a bottom in the commodity. From March 2 through May 4, U.S. Oil (USO (http://seekingalpha.com/symbol/uso)) gained 25 percent, but UNG fell 15 percent, a difference of 40 percent. While it looks like an attractive divergence, crude oil demand is relatively inelastic, with most of the fuel going for transportation (70 percent). Thirty-four percent of natural gas goes to industrial demand, with another third to residential and commercial and a final third to electric power.


[More in next post]


http://seekingalpha.com/article/136509-the-ultimate-commodities-etf-guide

Lady

[XL-entLady]

[continued from last post]

Leveraged Funds. Following the popularity of ProShares double-long and double-short equity ETFs, PowerShares launched a suite of ETNs based on the Deutsche Bank commodity indexes used for its ETFs. The ETNs replicate PowerShares ETFs with single- long funds, as well as single-short, double-long and double-short (the exception is gold; PowerShares does not offer a single-long ETN). One positive thing about the leveraged commodity funds is that the price movement of commodities has been less volatile. In the short term, the funds have sometimes traded such that the single-short outperforms the double-short, but over the long term, these funds have separated as expected. They still suffer compounding effects and the returns may deliver more or less than twice the leverage.


A big reason for the PowerShares funds’ strong performance is that they track the monthly performance of the underlying index, which itself has performed well because the Deutsche Bank Optimum Yield Indexes do not blindly roll contracts; instead, they select the contract that maximizes backwardation (futures are lower than the spot price) or minimizes contango (futures are higher than the spot price). ProShares uses the DJ-AIG indexes, also used by iShares, for its leveraged funds and offers double the daily change in prices, the same as for its equity funds.


If you’re an individual investor looking for commodity exposure but have little knowledge of the sector, stick with the broad indexes. Exposure isn’t necessary for a portfolio, but besides a play on an economic recovery, the broad indexes also offer inflation protection. The governments of the world can print paper currency on a whim, but they can’t print wheat, oil or copper.


http://seekingalpha.com/article/136509-the-ultimate-commodities-etf-guide

Lady

[alevin]

[continued from last post]





If you’re an individual investor looking for commodity exposure but have little knowledge of the sector, stick with the broad indexes. Exposure isn’t necessary for a portfolio, but besides a play on an economic recovery, the broad indexes also offer inflation protection. The governments of the world can print paper currency on a whim, but they can’t print wheat, oil or copper.


http://seekingalpha.com/article/136509-the-ultimate-commodities-etf-guide

Lady

Love it Lady, Seeking Alpha rules. I've learned so much there that's saved my butt more than once.

[XL-entLady]

Most interesting read of the day

The link below says that the big money is now betting on biotech and gold miners.

This is a long article so I'm just going to post a paragraph that summarizes the article and if it piques your interest you can click on the link. I thought the information was very interesting - - now I just need to decide what I'm going to DO with the info! :toung:

"...For the short and medium-term, it’s best to ride along with the big money. Think of the old adages like “the trend is your friend.” Right now the trend is toward healthcare (biotech specifically) and assets which offer inflation protection (gold stocks have been exceptionally possible). We’re sure to find success in the long growing trends like inflation protection and healthcare in the months and years ahead...."

http://www.dailymarkets.com/stocks/2009/05/15/gold-mining-stocks-where-the-big-money-is-betting-big/

Lady

[XL-entLady]

David Schultz in the 5/18/2009 SectorVue mentioned MOO as being of great interest, so that caught MY interest.

"...The market finally relieved some of the overbought pressure last week. Economic reports continue
to show declines however they are not in ‘cliff diving’ mode anymore. Is there an Express Train to
get back on or is the World economy going through a major de-leveraging to reset at current or
lower levels? I suspect the latter. Whether it be Autos or Banks we have experienced the dangers
of leverage -- essentially earnings on steroids.

Agribusiness MOO- Number one in overall rank. We have traded and taken profits in this
Sector several times over the last few months. I expect this horse to be a front runner for
the next several years as the world populous discovers and demands high protein meals.

Basic Materials XLB- This ‘shovel ready’ sector is up nicely in rank and price.

Housing HGX and Banking BKX- Housing fell into the lower ranks while Banks gave up
the top slot. I expect both to be a drag on the economy for some time.

Ultra ETF’s- Bearish Financial SKF and Russell TWM are still the trading vehicles of
choice short and long.

Technology TXX - Google GOOG and Apple AAPL rolled over last week and continue
to be bellwethers for fast moving institutional money.

Healthcare Sectors IHF,DRG, IHI- increased in price and rank last week. These have
been sleepers while technology stocks rallied in April and may be value plays now.

Utilities UTY- Stuck in the lower ranks and circling the drain."

http://www.decisionpoint.com/TAC/SCHULTZ.html


Lady

[alevin]

Just figured out UGA is my next buy. good article in FTalphaville yesterday, just spotted this morning. Backwardations=opposite of contango. Explains why gas prices been shooting up lately-aside from summer driving season. How long it stays in backwardation? who knows?

http://ftalphaville.ft.com/blog/2009/05/18/55960/gasoline-in-severe-backwardation/

[alevin]

Nivermind, I looked at charts, they just look too toppy, even if gas is in backwardation. Others might be braver than me tho, I'm justa chart chick:nuts:.

[XL-entLady]

I'm looking hard at FDN because I'm such a big fan of Amazon's Kindle that I think it could be the next big tech thing. (I'm also considering HHH, which has a much higher percentage of Amazon, but doesn't have GOOG or some others that I like as well.)

I'm trying to find an ETF that contains Amazon, APPL, GOOG and RIMM, but have not yet been successful. After reading the article below, maybe RIMM isn't as necessary to the perfect tech ETF holding. Research In Motion's Blackberry may not have a stranglehold on the market anymore. I mean I like my Blackberry Curve but I'm not a 'Crackberry Addict' so if something better comes along I don't want to be holding RIMM because I thought they were the only thing out there.

Here's a June 5 article that discusses pros and cons of tech phones:

Palm vs. Apple vs. RIM: The Mobile OS Wars Heat Up

by: BlindReason June 05, 2009 | about stocks: AAPL (http://seekingalpha.com/symbol/aapl) / PALM (http://seekingalpha.com/symbol/palm) / RIMM (http://seekingalpha.com/symbol/rimm) / S (http://seekingalpha.com/symbol/s) / T (http://seekingalpha.com/symbol/t)

"The Palm Pre (PALM (http://seekingalpha.com/symbol/palm)) launch is right around the corner, along with Apple's (AAPL (http://seekingalpha.com/symbol/aapl)) WWDC next week and a lot of people are wondering how this will impact the market dynamics in the handheld wars. The last time Palm innovated was around the time it acquired Handspring. This is its first innovative product in years-- will this save Palm?

I think this device puts Palm back in the race and while the Pre looks fantastic, this device launch alone is not enough to turn Palm into a contender again without a few more devices to round out the Pre family. Most importantly, it has shown that Palm can innovate again which is a fact that's been in dispute for this former market leader. People forget Palm defined this category and they have not had an interesting and innovative product since the Handspring acquisition. My bet though is it gets them enough runway to yet engineer a nice exit to Dell (DELL (http://seekingalpha.com/symbol/dell)) or some other acquirer.

If they can have a successful launch, then launch an OLED version of this thing with a 4+ size inch screen for more of a media device they could generate some interesting market share gains. I think that's enough for Palm's private equity investors to declare victory and walk off into the sunset as happy innovators.

A lot of reviewers including Mossberg paint this as a challenger to iPhone and given the lead designer came straight out of Apple a lot of these comparisons hold true. However, I think this device has implications for Rimm (RIMM (http://seekingalpha.com/symbol/rimm)) as well. This device will be on every carrier starting Q1 2010 and folks who have wanted an iPhone and not wanted to switch to AT&T (T (http://seekingalpha.com/symbol/t)) will pick this device instead of another Blackberry. Most people hate AT&T's network and why switch when you can get most of the functionality of the iPhone without having to move networks?

Just a quick word about Rimm. I think this continues a longer term decline for Rimm in terms of its advantages in the marketplace and its relative value proposition. A keyboard version of the iPhone which essentially the Pre is, only accentuates this trend. "[more....]

http://seekingalpha.com/article/141477-palm-vs-apple-vs-rim-the-mobile-os-wars-heat-up

Lady