Despite significant headline risk, stocks started December on
a decent note last week as the S&P 500 posted a small gain.
The Dow Jones Industrial Average gain one percent while the
Nasdaq finished the week lower due to the nine percent plunge
endured by shares of Apple (NASDAQ:
The bulls might be apt to say it is a positive sign that
stocks moved higher last week despite Apple's wicked ways. They
might also be inclined to remind us that December is historically
a good month for stocks. The S&P 500 rising in 16 of the past
20 Decembers speaks to that fact.
Unfortunately, U.S. policymakers have made little headway on
the fiscal cliff and the specter of higher tax rates in 2013
could spark some year-end selling by fund managers looking to
cleanse their portfolios of losing positions. With those issues
in mind, and the Federal Reserve meeting on Tuesday and
should be in play this week.
iShares Dow Jones U.S. Technology Sector Index Fund
The iShares Dow Jones U.S. Technology Sector Index Fund is the
answer to the trivia question "What ETF has the largest weight to
Apple?" Clearly, that makes IYW vulnerable to Apple's whims.
However, the ETF has shown the advantages of owning ETFs over
single stocks in recent weeks.
Despite being home to an almost 22 percent weight in Apple,
IYW was only off 1.3 percent last week while Apple dropped nine
percent. Over the past month, IYW has traded higher while Apple
has lost 2.5 percent. The other side of the coin is eager
short-sellers might be pondering how long IYW can enjoy the high
life while Apple slides.
Global X FTSE Greece 20 ETF (NYSE:
These are interesting times for the Global X FTSE Greece 20 ETF.
Just days after a massive Greek debt repurchase program was
announced last week, Standard & Poor's said the country is in
selective default. That news could hasten Greece's departure from
developed market to emerging markets status, the type of demotion
most countries want to avoid.
offered to buyback $38.8 worth of Greek debt, which should help
the country move toward cutting its debt-to-GDP ratio by 2020,
something the European Union desperately wants Greece to do. GREK
is not the largest or most heavily traded ETF on the block, but
these are the type of headlines that have move the fund in the
Also keep an eye on the CurrencyShares Euro Trust (NYSE:
) and the Vanguard MSCI Europe ETF (NYSE:
Energy Select Sector SPDR (NYSE:
It might come as a surprise to some that the Energy Select Sector
SPDR has gained nearly three percent in the past month, though it
is worth noting the energy sector has a mediocre December track
record. Those are not the only reasons XLE makes an appearance on
this week's list.
A common criticism of XLE is its heavy focus on just two
stocks - Exxon Mobil (NYSE:
) and Chevron (NYSE:
). The two largest U.S. oil companies combine for over 34 percent
of XLE's weight. As for Exxon, the situation there is far more
docile than it is with Chevron. Exxon appears to have found
support at $88 and that bodes well for some upside in the shares
As for Chevron, there are myriad headlines that could pressure
the shares. Investors can probably tolerate continued rumors that
the company is looking to make a major acquisition. Bloomberg
reported last week that Cobalt Energy (NYSE:
) and/or Kosmos Energy (NYSE:
) could mak for fine candidates for California-based Chevron.
However, there is the matter of the escalating cost of
Chevron's Gorgon field project in Australia. Viewed as one of the
centerpieces of Chevron's global growth plans in the coming
years, Chevron raised the production cost estimate to
$52 billion from $37 billion, citing labor and
, according to the Financial Times.
Add to that on Saturday, the New York Times offered up a
detailed account of
Chevron's legal wranglings with an activist hedge
related to the company's Ecuador legal woes. However flawed one
may view the Ecuadorian legal system as being, the issue of the
$18 billion judgment levied against Chevron there last year has
not been put to bed. The more that issue remains in the
mainstream press, the heavier the cap on Chevron's near-term
upside and that is not good for an ETF that devotes almost 15
percent of its weight to Chevron as XLE does.
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