Technology And Housing Starts Power ETFs Rally


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Strong earnings reports and guidance from technology companies plus upbeat housing data powered exchange traded funds higher across the board Wednesday.

PowerShares Dynamic Networking ( PXQ ) soared 4.9%, outpacing all non-leveraged ETFs. One of its top-10 holdings,Amphenol ( APH ), raised its full-year 2012 profit and revenue forecasts. Shares of the maker of fiber optic cable used in the electronics, communications and aerospace industries rocketed 16% -- the most in more than three years -- leading the rally in the S&P 500.

PXQ's other top holdings clocked robust gains in sympathy.VMware ( VMW ) blasted nearly 12%.F5 Networks ( FFIV ) vaulted 8%.Ciena ( CIEN ) spiked 7%.

PXQ has been in a downtrend since the beginning of April. Whether PXQ's move Wednesday is a counter-trend rally in a downtrend or the start of a new uptrend remains to be seen. It's trading below its long-term 200-day moving average, where price moves tend to be most volatile.

PXQ has a very weak IBD Relative Strength and Accumulation-Distribution Ratings combination of 22 and E. That means the ETF is lagging 78% of the issues on the market, and institutions are heavily selling shares.

SPDR S&P Semiconductor (XSD) vaulted 4.39% afterIntel (INTC) released second-quarter results and lowered its outlook for the current quarter, which wasn't as bad as analysts had expected. Deutsche Bank rated the world's largest chip-maker a buy.

"Intel achieved its volume goals for ultrabooks in the first half of 2012 and expects a strong ramp in the second half of 2012 on the back of 140 design wins across traditional notebooks, convertibles and tablets," Deutsche Bank's research analysts Ross Seymore and Bob Gujavarty wrote in a client note.

"The company continues to win new designs in handsets and tablets and expects more than 20 Intel tablets based on its mobile SoCs (systems-on-chip) to come to market timed with Windows 8 (Microsoft's operating system). Intel believes it gained MPU (microprocessor) share in the quarter and those gains are likely to extend into the third quarter of 2012."

Credit Suisse rated Intel shares outperform. Intel is "tactically a levered play on reaccelerating emerging market gross domestic product" growth, Credit Suisse's analysts wrote.

"Macro (economic) risks still persist, but no more so for Intel than the rest of the semiconductor group and the stock market," they added.

IBD's complete story on Intel by Patrick Seitz can be found here .

XSD is also trading below its 200-day moving average and has also been downtrending. It appears to have found price support at $40 a share. It has a weak 17 RS Rating and E Accumulation-Distribution Rating.

Market Overview

New data show the housing market may be on the mend. U.S. home construction in June rose by 6.9% from May's levels and 23.6% year over year, beating expectations. It reached its highest level in four years, according to the Commerce Department. New construction of new single-family homes -- which is less volatile than apartment starts -- hit a two-year high.

In afternoon trade, theSPDR S&P 500 (SPY) climbed 0.72%.

SPDR Dow Jones Industrial Average (DIA) surged 0.83%.

PowerShares QQQ (QQQ), a basket of the largest-100 non-financial stocks on the Nasdaq, soared 1.42%.

All three indexes regained their short-term, 50-day moving averages Friday and have been heading higher ever since. But the uptrend is questionable considering the number of distribution days the market has experienced since the follow-through day, as you can see in IBD's Big Picture .

IShares MSCI EAFE Index (EFA), tracking developed foreign markets, added 0.79%.

IShares MSCI Emerging Markets Index (EEM) shed 0.33%.

Follow Trang Ho on Twitter @TrangHoETFs .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing ETFs
Referenced Stocks: APH , CIEN , FFIV , PXQ , VMW

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