This week's "mini rally" has been good for more than just
boosting investor sentiment. Recent broader market gains have been
constructive for myriad sector ETFs. An array of funds that
recently had charts that looked mediocre at best now look pretty
good. Some are even showing signs of breakouts with the potential
to attack recent or even 52-week highs.
Investors need to be cognizant of the fact that market
volatility remains high and sentiment can shift on a dime in this
environment. However, the good news for the bulls is that critical
sectors such as technology, the largest sector weight in the
S&P 500, are perking up. Even some
bank ETFs are showing promise
Speaking of showing promise, that is exactly what these funds
are doing right now.
WisdomTree Equity Income Fund (NYSE:
) On its own, a 30-day SEC yield of 3.88 percent makes the
WisdomTree Equity Income Fund appealing. Then there is this
statistic: In the past 90 days, while the S&P 500 is slightly
lower, DHS has surged 5.6 percent. Beyond that, conservative
investors can really embrace this ETF as health care, consumer
staples, telecommunications and utilities names combine for over 63
percent of the fund's weight.
Here is the near-term technical outlook: DHS must notch some
closes above $47 to induce fresh buying and a confirm a breakout.
If the ETF can do that it has a clear runway back to $50, a price
DHS has not seen in over four years.
iShares Dow Jones US Oil Equipment Index Fund (NYSE:
) The iShares Dow Jones US Oil Equipment Index Fund faces some
horizontal (and psychological) resistance at $50. That is the first
hurdle. The second hurdle is the 200-day moving average around
$51.40. Assuming IEZ can deal with both of those tasks, the ETF is
then set up perfectly to race to $55-$57.
IEZ's biggest problem is not technical. It is
weakening fundamentals among oil services
. Schlumberger (NYSE:
), Halliburton (NYSE: ) and friends must give the market reason to
believe demand is stabilizing, if not improving, before investors
embrace these high-beta stocks and ETFs in earnest.
Consumer Discretionary Select Sector SPDR (NYSE: ) The Consumer
Discretionary Select Sector SPDR is the epitome of an ETF that
deserves a lot of credit. Recent U.S. economic data has been
concerning and that is to put things mildly. A vast majority of
consumers believe the recession will last another
Through all that doom and gloom, XLY is not just surviving, it
is thriving. It looks like the ETF broke out today and is ready to
attack its May high just over $46.
iShares Dow Jones US Telecom Index Fund (NYSE: ) The forecast is
easy to interpret for this low-beta sector fund. IYZ needs to keep
closing above $23. From there it can address resistance at $23.50.
Should that area fall on high volume and investors keep running to
conservative sectors, IYZ will likely finish 2012 on a high
First Trust ISE-Revere Natural Gas Index Fund (NYSE: ) The First
Trust ISE-Revere Natural Gas Index Fund continues to tempt,
technically speaking, and the chart
. Those looking for confirmation that natural gas equities are
finally ready to bounce to the upside need only look at the United
States Natural Gas Fund (NYSE: ), another ETF that is showing signs
of a breakout.
If significant inventory reductions or a fundamental catalyst
come to pass, then FCG and UNG could deliver impressive near-term
For more ETF trading ideas, click .
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