14 seconds ago 2009-12-04T07:12:03-08:00
ETFs rallied across the board on news that the Group of 20 countries will keep stimulus measures in place, and the greenback resumed its slide, boosting commodities.
Market Vectors Coal ETF (NYSEArca:KOL - News) was among Monday's top-performing sector ETFs. It gapped up 5% in above-average trade to 34.20. It broke above its October high and hit a 52-week high. It sports the highest Relative Strength Rating, 88, among sector ETFs. It has rocketed 130% year to date.
Market Vectors Steel ETF (NYSEArca:SLX - News) gapped up 4% in slightly above-average trade to 56.82. It found support at its 10-week moving average after pulling back sharply from a 52-week high of 59.62. It's in a buy range between the 10-week line and its latest high. It's up 93% year to date.
IShares Cohen & Steers (NYSEArca:ICF - News), Vanguard REIT (NYSEArca:VNQ - News) and iShares Dow Jones U.S. Real Estate (NYSEArca:IYR - News) jumped 5.5%, 4.88% and 4.79%. All three ETFs regained their 10-week moving averages after consolidating below it for the previous two weeks.
Since July 1, the sector showing the highest average increase in earnings was materials -- up 90%, with consumer discretionary up 34% and technology up 22%, according to a Thomson Reuters report released Monday. Industrials, down 10%, showed the biggest earnings decline.
But on a year-over-year basis, materials had the second-lowest rate of earnings growth, down 48%, among the 10 S&P sectors in the third quarter (based on the 95% of S&P 500 companies that have reported Q3 results). Energy had the lowest earnings growth rate, down 62%.
Overseas Strength
Emerging markets and other countries rich in natural resources led global ETFs on Monday. Market Vectors Russia ETF (NYSEArca:RSX - News) gapped up 5.7%. But volume came in below average. The ETF bounced off its 10-week average after pulling back from a 52-week high of 32.13. RSX carries the second-highest RS Rating, 88, among country ETFs. Market Vectors Indonesia (NYSEArca:IDX - News) ranks first, with an RS Rating of 90. RSX has vaulted 135% year to date.
SPDR S&P Emerging Europe (NYSEArca:GUR.TO - News) gapped up 5.6% to 43.41 in higher volume. Being heavily weighted in Russian stocks, its chart pattern looks like RSX's.
IShares MSCI Australia (NYSEArca:EWA - News) jumped 4.6% to 23.99 in strong trade. It also rebounded off its 10-week line after pulling back from a 52-week high hit in October. Its return year to date is 71%.
ETFs tracking India, Brazil, the Gulf States, Canada and South Africa rallied 3.8% or more.
News out of the G-20 prompted Mark Grimaldi, an asset manager with Navigator Money Management, to go from being 80% invested to fully invested.
"We're not market timers, but when we get things like the G-20 and positive GDP, we need to be agile," Grimaldi said. "The G-20 confirmed to me that we have smooth sailing between now and January."
Grimaldi also closed out of his short position in Treasuries via ProShares UltraShort 20+ Year Treasury (NYSEArca:TBT - News) and bought iShares Barclays Capital U.S. 20+ Year Treasury BondTLT.
Based on reports from Grimaldi's in-house rating system, which gauges price momentum and other factors, he's most bullish on the biotech, retailers, utilities and consumer ETFs.
The G-20 "reaffirms" Ron Rowland's overweighting in basic materials and SPDR Gold Shares (NYSEArca:GLD - News), which are benefiting from a weak dollar. He founded Capital Cities Asset Management, with $40 million in assets under management, and allstarinvestor.com.
Gold "was recently showing strength even on days when the dollar was strong," Rowland said. "There may be other forces at work, either inflation fears or geopolitical concerns."
Market Vectors Small Cap Brazil (NYSEArca:BRF - News) and iShares MSCI Australia are the largest international positions his portfolio.
"Australia's proximity to China and the rest of the fast-growing Southeast Asia region makes it particularly attractive," Rowland said. "For U.S.-based investors, investments in EWA are also helped by strength in the Aussie dollar over greenback."
Health Care Stocks
Ed Yardeni, president and chief investment strategist of Yardeni Research, recommended health care stocks, especially dividend-paying pharma companies, to his clients.
"The sector is currently trading at a discount to the market again," Yardeni wrote in a client note. "It fell to a new record low of 0.76 during April 2009 and has languished near there since then. There is plenty of room for the relative P/E to rise whether PelosiCare (the health care overhaul) happens or not."
