The big news last week was that the S&P 500 finally
managed to notch a new all-time high just 1,570 and the benchmark
U.S. index did so in a holiday-shortened week.
The first quarter is now in the books and it was the best
first quarter for U.S. stocks since 1998. Now, a rally that has
lasted longer than many expected heads into April, the last month
in the best six-month cycle for stocks.
Still, this rally has it doubters. Detractors would point to
leadership by low-beta sectors such as
consumer staples, health care and utilities
as one sign risk appetite remains limited.
Other detractors would point to the fact that, broadly
emerging markets stocks were dreadful in the
With those factors in mind and another jobs report looming
Friday, these are some of the
that will be in play in the week ahead.
PowerShares QQQ (NASDAQ:
) Acknowledging that technology was a laggard sector in the first
quarter, particularly compared to far more conservative fare such
as staples, it should also be noted that April is often kind to
the tech sector.
In fact, over the past five Aprils, the PowerShares QQQ has
gained an average of 3.6 percent,
to Seasonal Odds
Perhaps even more important is the fact that Apple (NASDAQ:
), QQQ's largest holding, has gained an average of 7.7 percent in
the past five Aprils. Legitimate participation from Apple could
be just what the bulls need to keep the sell in May and go away
crowd at bay. QQQ needs to break $70 on strong volume to lure new
iShares MSCI Emerging Markets Index Fund (NYSE:
) As the second-largest emerging markets ETF and the one that
tracks an index that billions and billions of dollars are
benchmarked to, EEM is often in the spotlight.
In the first quarter, EEM was in the spotlight because of
laggard performances from the BRIC quartet, South Africa, South
Korea and Taiwan. That had the so-called experts aflutter about
how awful emerging markets equities were acting.
Unfortunately, what got lost in translation is that not all
emerging markets have been bad to start the year. In fact, some
have been downright impressive
. The problem is many investors and EEM focus on the big
developing nations, which the big first-quarter
Two things to remember about EEM in the near-term. First, it
really needs some combination of BRIC, South Korea, South Africa
and Taiwan to start chipping in for some upside. Second, if
support at $42 fails, a return to the November 2012 lows is
Health Care Select Sector SPDR (NYSE:
) Sweet Sixteen. No, that is not a reference to March Madness,
but rather to the almost sixteen percent gain posted by the
Health Care Select Sector SPDR in the first quarter.
OK, so XLV gained 15.9 percent to be precise, but that is
still nearly triple the gain posted by the Technology Select
Sector SPDR (NYSE:
) and more than triple the run of the Materials Select Sector
This is no false rally in XLV, either. In late February, the
ETF had 140.7 million shares outstanding. As of March 27, that
number was nearly 154 million,
according to State Street data
. What that means is a lot more traders are hitting the buy
button on XLV than the sell button.
XLV is often thought of as blue-chip pharmaceuticals type of
ETF, but the fact of the matter of is the
biotechnology sector is on fire
and that is helping XLV, which as a 15 percent weight to that
group. Indeed, these are halcyon days for large-cap health care
For more on ETFs, click
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