Technology ETFs

A sector that may be heating up?


http://seekingalpha.com/article/1213...-market-sector


Technology ETFs: The Safest Stock Market Sector?

by: Gary Gordon February 19, 2009 | about stocks: IGN / IGW / RYT / SMH

"Some argue that stocks can't go higher until there are signs of a real estate bottom. Others maintain that the markets will be handcuffed as long as unemployment is rising. And most seem to concur that stocks will suffer for as long as bad debt remains on the books of the country's largest banks.
All of these arguments sound good in theory. Then again, the mere fact that there are few who share any optimism for stock prices is instructive in and of itself; specifically, prices may go much higher much sooner... simply because the masses do not see light at the tunnel's end.
Yet with the Dow back to November lows, and the broader S&P 500 ferociously testing its low mark in the bear, the tech sector is fighting back. Over the last 5 days, Rydex Equal Weight Tech (RYT) actually picked up 2.5%. (Warning: This one has very little volume... and I am NOT recommending that you use it!)
Charting the market (S&P 500) versus a variety of tech sector ETFs hits home the point; that is, not everything is back down to the bear bottom. Semiconductors (IGW) and Networking (IGN) are still up roughly 15% and 10% respectively.
http://www.etfexpert.com/.a/6a00d834...16db28a4-800wi
I can't say that I am surprised by the networking sub-sector. In fact, I've written several pieces on using the Networking Fund (IGN) as an Obama play for rebuilding tech infrastructure.
On the flip side, I have to wonder why "semis" are suddenly garnering interest. Historically, stock price appreciation in the semiconductor space often precedes broader economic recovery. Are investors starting to see better days ahead? Or are they merely bargain hunting in a beaten down arena?
For what it's worth, Morningstar has a 5-star rating on Intel, Texas Instruments and Applied Materials. These companies account for 60% of the price movement of the Semiconductor HOLDRs (SMH).
Other than attractive valuations, however, most of the economic info on semis is pretty grim. Fitch's 2009 Rating Outlook for the semiconductor industry is negative due to weaker demand for computers and headsets that represent 60% of global consumption. What's more, China's semiconductor market is expected to decline by 5.8 percent in 2009.
Year-to-date, the thinly traded SPDR Semiconductors (XSD) is performing better than its peers. This may have something to do with its equal weighting approach across large-cap, mid-cap and small-cap companies.
http://www.etfexpert.com/.a/6a00d834...0f16970c-800wi"

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